DaretothREdux (52.64)

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Give me one example. One single successful incident of a government, any government, injecting massive amounts of stolen money (I mean tax dollars) into anything (infrastructure or otherwise) and the overall outcome was economic GROWTH.

I am not talking about padding an economic landing either. Although if you desire and you think you can prove that it was ever necessary to steal from the people to ward off economic Armageddon (whatever the f^&k that is), then feel free to comment here as well.

If no one can report a single time that it has worked in the past, then why should I now give the government a blank check to spend my future progeny and me into perpetual debt?

Note: Any of you who read my blogs regularly will know that I always welcome discussion, comments, and rebuttal, but that I usually write humorous satire. This time I want your opinions and am encouraging a healthy debate (please refrain from name calling), and give your best argument here. And if you are felling generous, you could rec this to keep it going so that others may find enlightenment through our discussion.

I can give you one example, but it's not the one that you're gonna like. The Soviet government invested massive amount of tax dollars in the economy. In fact, all the investment the Soviets had came from the government because the corporate tax rate was 100% and foreign investment was nonexistant. This did result in a decent economic growth, so in terms of pure economy I would not hesitate to recommend the Soviet model. But there are two caveats. First, the model requires a 100% state ownership of assets in order to be efficient. A hybrid can't work: when you let private interests coexist with the government, you will soon find the government in bed with these private interests. Secondly, the model will stop working at some point when government officials realize that they can go back to capitalism AND become capitalists in the process (basically, this is how the Soviet system fell apart...the reasons were social, not economic).

You seem to have learned a different history of the Soviet Union than I have. Of course, Animal Farm is a little biased and not an extensive study by any means, but can you show me charts or data that supports "economic growth" in the U.S.S.R.? What I was taught in history was that the "five year plans" were mostly terrible economic policy. You might argue that yes the Soviet's went "from a mainly agrarian society and became one of the world's three top manufacturers of a large number of capital goods, heavy industrial products and weaponry." But you can't prove that it would not have grown faster and more effeciently in a free market capitalist society. In fact, I think we have proved just the opposite.

The political climate was such that few people ever provided negative input or criticism of the plan. Thus, Soviet planners had very little reliable feedback which they could use to determine the success of their plans. This meant that economic planning was often done based on faulty or outdated information, particularly in sectors with large numbers of consumers.

As a result of the above, some goods tended to be underproduced, leading to shortages (defitsit, дефицит), while other goods were overproduced and accumulated in storage. Low-level managers often did not report such problems to their superiors, relying instead on each other for support.

You might say, "Well...they grew didn't they?" But you can't possibly tell me that it was more effecient than other countries that practiced lassiez-faire.

But thanks for the discussion either way. I am still open to statistics and data that I am not aware of and will admit that I am wrong if you can show me such.

Actually the question should be returned to you. When has there ever been sustained laissez faire free market growth that did not eventually lead to a market failure?

But I'll bite...

I think so much of this discussion gets caught up in politics, that we forget that this is actually a very simple macro vs. micro economic issue. In the micro sense, a good firm needs to cut costs, lay off workers, cut down on purchases, and stay afloat. People need to save money and cut their spending. However, from a macro sense, if we know that if this happens, the effect on the economy is devastating.

If the crisis is severe enough, the levies break and the situation deteriorates. The same cycle repeats.

You eventually have a situation where the means of production are available, but workers are locked out. People always talk about "bottoms", but I don't agree with bottom theory. Economics is 50% material, 50% collective psychology. You take too many people out of the system, for extended periods of time, they're not going to wait for investors. They're going to break down the doors, ignore property ownership (itself a government creation anyhow) and start producing. It's happened before. They come out of the woodwork. The system would collapse without government. There's no doubt in my mind about that. If you think the government stealing your precious money is bad...

just wait. Faith in markets? Nope. I take nothing on faith.

So, I say, on with the stimulus. Double it. Its not big enough as it stands. Obviously, debt is a problem, but then, deflation increases real debt anyway. Get the helicopters ready, and make it rain baby. I know, it's not an ideal situation, but our options are bad and worse.

the question is not as simple as you imagine. If you compare USSR with the USA, Canada, Australia, or Western Europe, then yes, I think we can argue that market economy has performed a little better. But wait, here is where it gets interesting. What about India, Mexico, Brazil, Argentina? Didn't they all have market economy? What about Africa, for crying out loud? Is anyone going to deny that Nigeria, Angola, Zimbabwe, you name them, are capitalist countries where the means of production are held privately? Of course you will answer to that that these countries had a bad system of government, and a corrupt government can run the best economy aground. But by the same standard, why would you deny the possibility that some of the problems of the Soviet Union may also have been caused by bad government? After all, how would you feel is someone pointed at Nigeria and said, "look, this is what your laissurez-fair means"? The actual economic performance of the Soviet Union is a complicated matter. The economic performance under Stalin was generally not impressive at all, with real growth averaging 3%. In the 50s and 60s, the results were actually very impressive, with theSoviet economy growing 6-7% a year and showing as much vitality as any capitalist one. In the 70s, growth began to slow, but remained quite acceptable overall. Finally, in the 80s the combination of stupidity and corruption in the government reached guargantuan proportions and completely overwhelmed whatever good potential remained in the economic system. I will readily admit that the Soviet government failed in social terms as the system quickly became rotten at the very top level. As to its actual economic record, my comment will be more restrained. I would say the system passed the test when it came to running traditional sectors such as metallurgy, coal industry, electricity, railroads, public transportation, tank production, housing, food processing industry, shoes and textiles, health care, utilities, etc., and got the F when it came to anything high-tech and innovative - bungled the IT revolution, genetics, pharma research, new car technologies, new weapon systems, robotics, lasers, semeconductors, alt energy research, and so on. Then again, some market systems (like the above-mentioned Nigeria) failed both tests, others, like Sweden, passed both, and still others, like the good ol' USA, passed the second test and somehow managed to fail the former (bungled housing, health care, and public transportation completely, IMO).

Again. Great comments. But I think you may be confusing "Capitalism" and lassiez-faire. A government can run capitalistically and that is what the U.S.S.R. was doing. The disguise for the people was that it was all for the common good and that the wealth created would be shared among the people. This depending on one thing happening: those with the money had to be willing to give it up. The system collapsed when that didn't happen.

If you are right, though (and you could be), and the only way for economic growth to come from the government is to give over total control to a government, then I want no part of it. Because that means giving up all my freedom. Do you not think that maybe the reason Russia didn't keep up in the technology race was because you can't force innovation? Free market economics allows for one thing that government control doesn't. Freedom.

Are there problems with freedom? Sure. It can be abused just like any other great idea, but I would suggest that the benefits greatly outweigh the negatives.

I would argue that the USA in way bungled "housing" we have less homeless people than most anywhere in the world. I would argue that only when the government got involved in housing that it got screwed up.

The same could be said of healthcare. We used to be the envy of the world in healthcare. And even today many people come to the US when they need treatment. Then along came medicare and medicade (both government interventions) that drove up prices and drug costs (FDA doesn't help much either...also government).

I can't really argue when it comes to public transporation. Our interstate system though is second to none, but we do not have the train system that the rest of the world has to stay connected. I don't think this is a government screw up though so much as there was cheap gasoline and everyone wanted their car to drive. But believe me, if it becomes necessary to have better public transporation (which is happening slowly due to fuel costs), then I firmly believe (and would want) a private industry to build and run that system. Because the government would just make it more expensive and less effecient.

Again. Great comments. But I think you may be confusing "Capitalism" and lassiez-faire. A government can run capitalistically and that is what the U.S.S.R. was doing. The disguise for the people was that it was all for the common good and that the wealth created would be shared among the people.

This depended on one thing happening: those with the money had to be willing to give it up. The system collapsed when that didn't happen.If you are right, though (and you could be), and the only way for economic growth to come from the government is to give over total control to a government, then I want no part of it. Because that means giving up all my freedom.

Do you not think that maybe the reason Russia didn't keep up in the technology race was because you can't force innovation? Free market economics allows for one thing that government control doesn't. Freedom.

Are there problems with freedom? Sure. It can be abused just like any other great idea, but I would suggest that the benefits greatly outweigh the negatives.I would argue that the USA in way bungled "housing" we have less homeless people than most anywhere in the world. I would argue that only when the government got involved in housing that it got screwed up. The same could be said of healthcare.

We used to be the envy of the world in healthcare. And even today many people come to the US when they need treatment. Then along came medicare and medicade (both government interventions) that drove up prices and drug costs (FDA doesn't help much either...also government).

I can't really argue when it comes to public transportation. Our interstate system though is second to none, but we do not have the train system that the rest of the world has to stay connected. I don't think this is a government screw up though so much as there was cheap gasoline and everyone wanted their car to drive. But believe me, if it becomes necessary to have better public transportation (which is happening slowly due to fuel costs), then I firmly believe (and would want) a private industry to build and run that system. Because the government would just make it more expensive and less efficient.

In terms of government v. buffet (private industry) beign involved in the banking industry here is a great article to show that the government took tax payer money, and did not use it as effectively as a private individual.

"Free market economics allows for one thing that government control doesn't. Freedom."

Here I disagree. In a free market economy, freedom is a product for sale just like any other product, and free market does not guarantee you the money to purchase freedom with. In practical terms, if you look at how many Russians dared to tell jokes about Brezhnev to a colleague at work and how many Americans dare to tell jokes about their employer, I suspect totalitarianism might no longer look that terrible :)

"I would argue that the USA in way bungled "housing" we have less homeless people than most anywhere in the world."

Hmm, may I bring a point that I'm afraid is lost on the Western audience? Which country has the highest homeownership rate? America? Japan? EU? Austalia? Wrong. The correct answer is/was the USSR. It turns out that you can have a 100% ownership rate, and you don't need cheap mortgages for that purpose. Another trivia question. How many appraisers, loan officers, rating specialists, and RE brokers did the Soviet Union employ to make Comrade Bush's "ownership society" a reality? Amazingly, the answer is zero. What, you really mean it is possible to afford houses without mortgage brokers? Yeah, it appears so. In the world of Soviet economics, when you employ more bricklayers and less brokers, that sort of speeds things up and everything becomes more affordable. Upon a second thought, this concept even makes sense, doesn't it? On the other hand, your glorious capilalist system is trying to fulfill that American dream, and trying so hard that it always looms somewhere on the horizon just like Communism did in the Soviet mythology :)

"The same could be said of healthcare. We used to be the envy of the world in healthcare. And even today many people come to the US when they need treatment" .

I am afraid that more people from the US now come to Europe to receive treatment. I did, for one.

"then I firmly believe (and would want) a private industry to build and run that system. Because the government would just make it more expensive and less efficient."

Hmm, here's the problem with having private business build public transportation system. Suppose the government took your tax money and built a tram. Then, once the expences are paid, you can use it for free so you will use it as much as you really want to. Now, suppose a private company tries to do the same. It would have to charge you for the use of the tram. You will try to reduce your charges by cutting on trips that you really wanted to make but upon a second thought figured you could sacrifice. But by using the tram less often, you force the company to raise fees for the other users, which forces them, in turn, to cut their consumption still more, which forces the company to shut down the least profitable lines...The result is that the company finally squeezes its share of profit, but the transportation system remains underutilized. So I would still leave that transportation business to the government.

Bottom line: Private initiative is the preferred choice when you want something innovative that's never been tried before. Socialism is preferable when it comes to production that is boring, simple, capital-intensive, large-scale, and does not present any technological challenges. Ideally, you would want some mixture of the two systems. The only trouble is, when you try to cross-breed a grass snake with a hedgehog, you get 6 feet of barbed wire. Which is what we're getting with Obama :)

Did the New Deal's "massive government intervention prolong the Great Depression?"

Ummm ... no.

On deeper examination, I discovered that the right bases its New Deal revisionism on the short-lived recession in a year straddling 1937 and 1938. But that was four years into Roosevelt's term -- four years marked by spectacular economic growth. Additionally, the fleeting decline happened not because of the New Deal's spending programs, but because Roosevelt momentarily listened to conservatives and backed off them. As Nobel-winning economist Paul Krugman notes, in 1937-38, FDR "was persuaded to balance the budget" and "cut spending and the economy went back down again."

To be sure, you can credibly argue that the New Deal had its share of problems. But overall, the numbers prove it helped -- rather than hurt -- the macroeconomy. "Excepting 1937-1938, unemployment fell each year of Roosevelt's first two terms [while] the U.S. economy grew at average annual growth rates of 9 percent to 10 percent," writes University of California historian Eric Rauchway.

What about the New Deal's most "massive government intervention" -- its financial regulations? Did they prolong the Great Depression in ways the official data didn't detect?

Nope.

According to Federal Reserve chairman Ben Bernanke, "Only with the New Deal's rehabilitation of the financial system in 1933-35 did the economy begin its slow emergence from the Great Depression." In fact, even famed conservative economist Milton Friedman admitted that the New Deal's Federal Deposit Insurance Corp. was "the structural change most conducive to monetary stability since ... the Civil War."

The list is endless, but they are all taxes. Now, all that money taxen is to be invested in so-called "job creation" but it just as easily could have been left in private hands and created just as many jobs. In fact, this is where any "job creation" program run by government is PROVEN to be less effective.

First, the government has to create an overseeing bureaucracy or expand an existing bureaucracy in order to "manage" the investment. In the private sector, the entrepreneur handles this role, at a much lower cost. Second, since the bureaucrats aren't FINANCIALLY RESPONSIBLE for the RESULTS of the CAPITAL INJECTION, their judgment is not as objectively price-oriented. In fact, as I will add in my follow up comment, it has been proven that THEY CAN HAVE NO RATIONALITY WHATSOEVER in how they inject the capital, as they lack a rational pricing model for calculation to make their judgments.

That is why, as our blogger notes, government intervention in the market place has never worked. It is not even possible. So much for the politics of hope.

-With respect to the late, great Henry Hazlitt, whose book "Economics in One Lesson" should be required reading for every American

This follow up comment addresses two fallacies presented by the people commenting.

First, the Soviet collapse was NOT a social problem, as our Socialist overlords would like you to believe. It was an ECONOMIC problem through and through. Yuri Maltsev, former Chief Economic Officer of the U.S.S.R shattered this myth in his book "Requeim for Marx." In it, he details how Ludwig Von Mises was correct, that Socialism failed in Russia due to the lack of a rational pricing structure.

Oh, you've never heard of Maltsev or Mises? Hmm, could it be that the Socialist State run schools in America don't want you to know about all that?

But you're probably too afraid to read it, so I'll just summarize for you.

1. Marxism/Socialism, whatever you call it, IS NOT A POLITICAL SYSTEM IN ANY WAY. It has no political Constitution, legal system, or agreed upon standards of implementation. None. They do not exist, because the political system is ASSUMED. Total authoritarian control of all aspects of life by hand-selected bureaucrats.

2. Marxism/Socialis is ONLY an economic system. It is nothing more. It's stated goal, in any perverted or soft-fascist form, is "ownership of the means of production." That is it. They can hem and haw and be deceptive all they want. That is their only stated goal ever.

3. As Ludwig Von Mises PROVED in 1920, Socialism is an economic system that is IMPOSSIBLE. Don't believe me? Start reading here:

Perhaps I'll chime in when I have more time available, but I just wanted to point out what a great discussion this is. This is one of the more interesting blog posts I've seen in a long time. Thanks Daretoth, for asking a very important question. Keep the discussion going! :)

Now it's time to attack the arguments presented here on an individual basis - to knock the dust off the nonsense that is taught by Keynesian/Socialist/Marxist economists to justify massive govenrment theft.

IT'S TIME TO RESTORE LIBERTY AND RULE OF LAW TO AMERICA

It is absolutely beyond silly to argue whether or not The New Deal prolonged or shortened the Great Depression since there is no basis of comparison. Although Statists / Keynesians can march out govenrment data (and we all now how laughable government statistics are), LIBERTY lovers can not point out how that "other America from 1929-1941" coped WITHOUT the heavy handed government intervention.

Instead, let's use some deductive reasoning. The first problem with the idea that big daddy government solved The Great Depression is the the government didn't even understand what CAUSED The Great Depression. As Murray Rothbard famously chronicled, and as F.A. Hayek argued before him, the Federal Reserve's own inflationary policies created the boom investment period of the 1920's.

Now, some of you, so sadly, don't even understand what's so bad about a boom?!! The problem with a boom is that it creates a recipe for the misalloctaion of capital resources. In other words, it's a recipe for a bust. The run-up in prices during the boom encourages more speculation and ever increasingly risky investments. (Stop me when this starts sounding familiar.)

Yet, here we are agin, facing the same CAUSE for today's recession/depression, and yet FDR supporters and big government supporters still don't know WHY it happened! LOL, and yet they are going to tell you that FDR ended The Great Depression and sped up recovery. It would be laughable if it wasn't so tragic.

Here is the link to the brilliant work of Murray Rothbard - a free PDF version of his book "America's Great Depression."

My next attack will center on the oft-repeated fallacy of so-called Limited Government Republicans, that a mix of Socialism and Capitalism is a good thing.

There is a name for a mix of govenrment and business, a marriage of extorting the people in exchange for the "contracted out" "politically connected" businessmen. The name is Fascism, and it is alive and well in America.

Defense contractors.

Healthcare providers

Big Pharma

Wall Street

Every business regulation every imagined, outside of the wacko Nazi environmentalism of the self-immolating Far Left.

The Republicans, and their cronies have successfully practiced pseudo-Socialism for the last 100+ years, chipping away at form of competition and free markets.

It was Republicans and businessmen, huddled together who laid the groundwork for the New Deal, that so many Left-wing morons champion. FDR's policies were nothing more than a continuation of the spirit of cartelization brought on by Hoover and his cronies.

It's tough to argue with history, unless of course, those same cronies wrote the history books. The problem with the Republican championing of pseudo-Socialism instead of outright Socialism is that they have let the Marxists choose the playing field. Now, the Republicans stand for NOTHING except messianic crusades against any enemy real and imaginery with a policy at home and abroad that so closely resembles Socialism as to be indistinguishable from it. Thanks a lot, William Buckley, you idiot.

"The Conservative has long been marked, whether he knows it or not, by long-run pessimism: by the belief that the long-run trend, and therefore time itself, is against him. Hence, the inevitable trend runs toward left-wing statism at home and communism abroad. It is this long-run despair that accounts for the Conservative’s rather bizarre short-run optimism, for since the long run is given up as hopeless, the Conservative feels that his only hope of success rests in the current moment. In foreign affairs, this point of view leads the Conservative to call for desperate showdowns with communism, for he feels that the longer he waits the worse things will ineluctably become; at home, it leads him to total concentration on the very next election, where he is always hoping for victory and never achieving it. The quintessence of the practical man, and beset by long-run despair, the Conservative refuses to think or plan beyond the election of the day. " - Murray Rothbard

There is a historical account, zloj, that I will find for you when I get home of a pre-eminent Socialist of that era thanking Mises and saying, sarcastically, that they will "erect a statue of Mises in the center of Warsaw" when they show him they've solved the economic calculation problem.

Naive, eh?

Isn't it naive that Marxists ran around for about a 100 years telling everyone how great their system would be, yet had never once considered exactly HOW they'd distribute the resources?

Wow. I just drove home from work and did not expect to see so many comments! But I think it's wonderful and I thank all of you.

David,

Great posts! And I love mises.org and read everything I can from there often, but you have presented my arguement in a such a way that I doubt I could have done. I thank you a great for that, but I do ask you refrain from name calling (I know its hard sometimes as you are obviously very passionate about this subject). I feel though that any message will reach people faster if you remain civil and present your case well back up by the facts.

zloj,

I am glad you joined in this discussion as well (though I may not agree with you), I think you have something very valuable to offer in the way of a new perspective.

saunafool,

I promise, I can find you a number of "respectable" historians who think FDR prolonged the Great Depression. I know a few personally. And I would like to point out that GDP is measured with government spending included! I also think that if Obama spends trillions of tax dollars the GDP will rise, but I don't think the "real economy" will grow. Just look at the stock market chart during the Great Depression if you don't believe me! It wasn't until after WWII ENDED that it began to once again rise.

This is awesome guys! I haven't been this excited about one of my posts since I got so many recs for mocking alstry!

All I ask is that you keep the debate as civil as possible (you don't have to remove your emotion though!) and we can keep this discussion going as long as you all want.

But David's right: we have no example of what happened 1929-1945 without government "help," but we do know that we had GDP growth out the wazoo and people out of work and starving. But at least there was GDP growth.

If you look again the GDP charts 1929-1945, you can see the inflation line. There was no economic growth, just growth in the number of dollars, meaning that in the time FDR "doubled" the economy, he had actually doubled the supply of dollars being used to value the economy.

David's right about the Republican party, too, though I would argue that (T. Roosevelt notwithstanding) the worst decay of the Republican party didn't set in until Hoover. As bad as the Fed was, we had plenty of economic freedom to brush off the 1929 stock market crash until the Hoover started the pre-New Deal. It was politically unsuccessful and deflationary, but in all other ways practically indistinguishable from FDR's New Deal.

Another thing David is right about is that U.S. schools have inherent pro-government, (i.e. Marxist) bias. This is a frightening confluence of (in chronological order) happenstance, carelessness, and intrigue. Long ago, when towns were small and our land was free, the people sent all their little kiddos to learn from one person, who was well-known to the townsfolk, well-regarded, and respected and obeyed by the children. Then, we just got used to education being centralized, and we allowed it to be usurped by the government, because, after all, education is a basic human right, right? Well, in the early years of the Soviet Union, before even the Great Depression, Lenin decided that he wanted to influence U.S. culture in any way he could, and he made a determined effort to infiltrate the U.S. school system with Soviet spies. As teachers and principals owed their jobs to statism in the educational realm, this effort was met with a relatively socialism-friendly school system.

Another thing I disagree with David about is what it means to be conservative. Rothbard casts the Conservative as someone who is focused on winning the next election, and enables the advance of socialism domestically. A conservative is anyone who advances the ideas of economic freedom and vigorous national defense. (That is, a political conservative is someone who advances the political ideals of economic freedom and national defense. A social conservative, on the other hand, is someone who advances the social ideals of personal morality and adherence to religion. The overlap has caused a lot of enmity between libertarian atheists and conservative Christians, and cost a lot of economic freedom.)

Basically, Rothbard and David confuse conservatives with unconservative Republicans. Unfortunately, there's no law saying that Republicans have to be real conservatives.

DaretothREdux, Wow! Great Discussion! It looks like this discussion is morphing beyond the original questions (which is great, that is the point of all good discussions), but I will go back and give an example for the original question: "One single successful incident of a government, any government, injecting massive amounts of stolen money (I mean tax dollars) into anything (infrastructure or otherwise) and the overall outcome was economic GROWTH"

This depends on how you define incident, but I will take a few liberties and give an example: The early US Space Program up until the moon shot (Apollo). This event/mission saw one of the greatest explosions of useful employment and technology in the world. From this not only did we vastly increase our Aerospace knowledge but the real benefit was supporting technologies: The program really advanced developement of the integrated circuit, which gave rise much more compact electronics and eventually the digitial computer. Very obvious spinoff. But probably the biggest benefit was the explosion in materials science. Do you know how many varied and different materials it takes to get into space? Advanced metallic alloys were developed, new polymers, epoxies and resin systems, new classes of lightweight fiber materials. There were huges advances in antenna tecnology. There are many examples.

But this in and of itself is not the point, it is the theme, which is: Goverment provides net benefit when it thinks of a goal for the nation, and takes some tax money toward acheving that goal, but allowing private industry to come up with most of the actual advances.

Most of the new technolgies that I listed above were not invented in Washington or Cape Canaveral. They were developed in labs at private companies, or academic labs sponsored by private industry.

This really goes back to a point that you made Dare, and that is freedom. Government is good at coming up with a big picture idea. Private industry is good at finding solution to these goals and finding useful and economic solutions. In a lot of ways this is the opposite of the recent central planning tendencies of the government.

Let me tell you that I find Marx equally naive, lest you think that I'm picking specifically on Mises. The one thing Marx got right is the labor theory of value (but then, it existed well before Marx, so Marx really made no contribution that would be both original and correct :)

Speaking of Mises, I suspect that you must have read some panegiric to the guru, and taken it uncritically. Otherwise, you would have seen how shallow his criticism runs and how easily all his points can be answered.

1. How would you distribute resources if you're a Marxist? That is easy. A Marxist would distribute them by consulting his common sense. This (admittedly very crude) distribution creterion could still prove effective by eliminating the waste thatis inherent in the market economy where every player spends 90% of his energy attempting to promote his interests in ways that would benefit him if the others did not do the same, but that prove detrimental to the group as a whole as long aslong as everybody is doing the same.

2. How would you compare the price of insulation with the price of energy? Again, there are several possible answers to that obection. The first obvious possibility is to look at comparable prices in some other country that has NOT adopted Marxism, and use them as a guideline. Unless the whole world goes Marxist, this solution should work. You can take the price of energy from the Wall Street Journal, find the price of insulation from a corresponding website, and use that information for your own Marxist purposes thus making your choice between energy and insulation as efficiently as any capitalist. The second answer is that you can calculate the number of man-hours it takes you to produce energy vs. insulation. If you don't encounter shortages of row material or labor, then the Labor Theory of Value holds. If you do encounter a shortage of some raw material, then the value of this particular material is found from marginal utility considerations, and the rest of the production process is still described in terms of man-hours. The final consideration is that in most cases, the choice of energy vs. insulation is not nearly as critical as Mises thinks, in other way, either choice will be a legitimate decision. As the "free market" sets the price of energy with such "efficiency" that it goes from $147 and $37 within the same 3-month period, there isn't much that will be missed if your decision ignores some of these invaluable market instructions.

3. How will you handle the impossible goal of coordinating production plans? Mises must have forgotten to tell Soviet officials that it was impossible because in the actual planning practice this coordination was easily achieved by allowing some leeway for reserve capacity. In other words, instead of telling the factory manager to produce exactly 1,036,867 rivets that follow from some complex set of equations, the planners would tell him to produce 1,000,000 rivets, try to go for 1,050,000 if he can, and use the inventory left from the previous years to fill the gap, if any. This practice is no different at all from the planning process in any capitalist firm that can't predict consumer demand in advance and still somehow manages to survive in spite of Mises.

4. How can you decide whether to use bulldozers or shovels? Easy. You use whatever takes you less man-hours and consumes less hard-to-replace resources. There is no need to make a precise calculation because that would be trying to be holier than the Pope. Just remember that in that Mises's paradise of capitalist efficiency, nobody knows the future price of anything with a precision greater than 10%. So you choose one vs. the other when the man-hour calculation is unambiguous, and when the numbers are about equal and you can't decide based on economic merits of the case, you just use your own common sense. Which is more progressive and gives you a better chance to keep pace with technology: shovels or a bulldozer? Which offers more intangible benefits? Which is better for the workers? Etcetera, etcetera. This is not really difficult.

By the way, if you think calculations are any easier in a market system, you're wrong. If you try to find out whether you should be building a coal plant, for instance, and incorporate in your decision future prices of coal, oil and gas, demand for energy, coal shipment costs, price of bricks for your plant, future market cap of your IPO, and so on, and so forth, until you get the same horryfying infinite system of equations with infinitely many unknowns. How do you handle these problems? By applying your intuition and some common sense, that's how.

I will address each of these points one at a time starting with the Labor Theory of Value.

But first, let me apologize to you and to the blog author for written in a condescending tone. I should know better. Sometimes, my anger at being lied to by so many people (especially on TV every day) gets directed at the wrong people. That's stupid and of poor judgment.

Now, the Labor Theory of Value as stated by Engles in "Herrn Eugen Duhrings Umwalzung der Wissenschaft" pp 335, states "As soon as society has taken possession of the means of production and applies them to direct social production the labor of everyone, however different its specific use may be, will immediately become direct social labour. The amount of social labour inherent in any product does not require to be ascertained in any roundabout way: everyday experience will show how much of it necessary. Society can easily reckon how many hours of labour inhere in a steam engine, in a hectolitre of wheat of the last harvest, in a hundred square meters of cloth of certain quality...... The utility of the different objects of consumption weighed against one another and against the labour necessary for their production will determine the plan."

Now, first off, the theory of marginal utility has thankfully put the Labor Theory of Value into the dustbin in even the most Marxist institutions.

Here, the problems lies 3 fold:

1. The assumption is made that world is static. In other words, as things are now, that's how they'll always be. In fact, had Engels gotten his way, we'd still be assigning labor today at the same rates as his day. Why? Ask yourself, how would the central planners deal with change? Would central planners embrace new technology that altered the amount of labor for each product? And once that new technology was discovered (if a planned society could even develop a new technology outside of weaponry), how would it be implemented without upsetting such a delicate balance? How would it's supplies and the new products that this new technology bring about be rationally distributed?

This is a major problem for the LTV crowd, and maybe one you've never considered. LTV assumes a static world. This is not surprising. People that are most susceptible to the lure of Marxism do not like change. In Socialist writings, the call is always to a Paradise Lost, of ancient pre-Capitalist days. Of course, all these calls are the same calls that those same ancient people had also been saying for centuries and centuries ad infinitum.

Now, from here I'll go on. It's funny that the 4 points you bring up were all refuted by Mises in 1922, in the his book "Socialism." I'm glad I have a copy on hand.

Or, if you want we can just skip the song and dance, so you don't have to wear yourself out with all that mad Google-ing you're doing.

The 2nd problem with the Labor Theory is that it ignores differences in the quality of labor.

We can all see that it takes more skill and dedication to be a periodontist or a mechanical engineer (let alone thousands of other professions) than it takes to be a plumber (not that a blue-collar trade is unworthy - far from it. The world would not exist without their services).

Here, the story of my own life, well before I read Mises or Rothbard, can defeat LTV. I was untrained Marine infantryman. I left the Corps, patriotic feaver through and through, and worked one security guard job after another. According to Engels' LTV, there was no reason, outside of State compulsion (for the good of society) to re-train myself. And, if I did, what would I retrain to? Who would know whatIshould become? Obviously, it's a crapshoot, and the best idea is for me to make that choice. Either I should remain happy as a low wage security guard, or choose my own profession.

I went back to school and re-trained as a Unix administrator. After several years, the market turned again. Unix admins were being squeezed out as those evil producers found they could save costs by using more cost-effective Windows solutions. I was a marginal Unix admin. And like all marginal business ventures, you either adapt or you go bankrupt. That's the way the market works. I could accept a lower salary and be a Windows admin or I could re-train again.

I chose to go back to school in my mid-30's and learn programming. Now, I'm a computer programmer, and maybe someday I'll have to re-train again.

But what a wonderful journey it's been. How much have I learned! How much have I grown and prospered! All this would never happen in Engels' world.

His world is static. Paradise is already achieved. No need for re-training for anyone. My gosh, what a horrible paradise that I want no part of.

My 3rd refutation would once again return to the political boondoggling that implementation of the LTV would cause, but I'll leave that for now.

Since it's late here in Qatar and I'm tired, I'm going to skip the rest of my critiques of your arguments. They were addressed over 80 years ago and are nothing new. Anyone here on TMF can see the flaws.

I'll quickly address the irrationality, as you see it, of the pricing mechanism. Failure to understand how prices work, particularly in turning first order goods into higher order goods is the hallmark of every Socialist I've ever met. Voluntaryists like myself need to do a better job of explaining it. In an uncertain economy, with fiat money, inflation, and government intervention at every level of society distorting markets through price controls, subsidies, taxes, etc etc ad infinitum, it appears as though prices in production are unpredictable. But even in this messed up world, the level of risk associated with that uncertainty can be ascertained and discounted into the price, just as you discount stock purchases with risk pricing.

Again, I can expand on all of this tomorrow, but tonight I must hit the sack. Thankfully, I have a wonderful job in programming to look forward to tomorrow, and not Engels' vision for me.

My thesis is simple: At this point all we want to to ease into the next phase of the landing. If we were to crash right now we’d find ourselves with an industrial base that employs only 10% of the people. As we continue to borrow the dollar will devalue and the people will once again begin to work manufacturing things. So far as burdening your children with a massive debt…chuckle…Do you actually think that they will continue to pay for our grandparents war with Stalin? “No taxation without representation!”

Thanks again for your insight. I look forward to hearing more tomorrow. I have honestly learned more from this post than just about any other post on TMF! And I think that all this is very important if you desire to be a really good investor. After all we are trying to figure out who is creating wealth and who is controlling it. Either way we want some of it for ourselves.

So a 40-50% decline wasn't a crash? Granted it could be worse (for wall street and investors), but we are not easing anything for "main street," the layoffs will still happen and many people will still lose thier homes, and profits WILL decline.

As to the taxation comment...you are ignoring the fact that you are already being taxed by inflation/deflation (whichever you prefer) and that the Fed has total control over which. Unless, of course, you were hinting that there will be some sort of revolution if they continue to try and make us pay in the future (which is also possible), but that still doesn't ignore the tax you are being forced to pay everytime they print more money.

The problem with economics is that it's a field which is treated like a natural science (such as mathematics) by observers and academia, where it is in fact, not a natural science. Like psychology, economic phenomenon can only be observed and then modeled after, but not accurately predicted because the independent variables are too numerous to be accounted for. Reversing the process by building a model first, and then expecting the world to follow it is just wishful thinking.

IMHO, the holy grail in the field of economics would be a historical study of national economies in the following proportions:1. A set of criteria for evaluating national economies along a continuum between command-economy and lassez-faire extremities at certain moment in time2. A set of criteria for evaluating growth in national production capacity at a certain moment in timeEliminate the cases where the basic functions of government are not met, and then plot the results on a graph. Given a sufficiently large sample size of nations and time periods, one would hope that a trend might become clear.

I think the easy way to spot a libertarian is to find out how he stands when the markets are collapsing. Usually they tend to be cold and objective saying corrections are necessary. Liberals and Conservatives dance to the same toon that government needs to act "and act now".

The more speaches I listen to Obama about the economy the more he sounds like Bush.

I've come to distinguish in my own mind between Democrats and Republicans. Democrats are tax and spend. Republicans are borrow and spend. Libertarians are Don't spend. I'm not sure we've seen a mass movement of libertarians since the "Democratic Republicans" ala Thomas Jefferson and co.

Its almost like the American people know they are getting stolen from, but at least the democrats will build roads whereas the Pub's just want to line thier own pockets.

I'm afraid I have to agree w/ Dare here that the real problem is too much centralized government control. If you make that argument as I do, then you have to establish the boundaries that the central government should be subject to.

The central government in my oppinion should: 1) Provide a stable currency to be used as a means of transactions. It should be backed by gold, resources, land, uranium et. 2) Provide for a national defense. Not an agressive freestanding army, but defense. If this can't be acomplished then it is best we return to the militia system. It works in other countries (Switzerland, Greece, Israel.)3) Provide means of transportation for interstate and international commerce. I feel in many cases that private companies should build these roads, trains et but that local government should operate them. Keep in mind that I am talking about large transportation projects, federal highways et not the road going in front of bob's grocier. Local government should maintain that.

On the other hand, especially when it comes to new projects (rail expansion at the turn of the century is a prime example) that investors will come up with the money if they feel they can make money. T Boone Pickens is another example of an energy investor who is throwing money at a problem that will benefit the common good but make him money in the process.

4) The item I'm open to debate at this point is healthcare. Centralized systems disiminate information faster, but they are largely inefficient. Of course having to deal with 900 different insurance companies the way we do now is inefficient too. This is one area where we have muddled the mix. If socialized medicine takes effect here, then you will still see private doctors who service the ultra-wealthy while everyone else gets substandard care as the un-washed masses. (Private vs Public school is an example of dual systems working togeather).

I think the government could be very efficient in routine care that is acceptable and practiced by nearly everyone and that preventative care benifits the public good. Treatments such as immunizations, contraception, mamograms et.

I was commenting on a main street crash AND burn. I think I disagree with you about this not helping main street over the long haul. With a devalued currency more goods will be produced here and fewer exports will come in. That’s what the entire world wants right now and we’ve been at it for 30 years! Case in point…my parents just bought an outrageously overpriced Sony LCD television for basically triple what you could get a comparable TV. Why did they do it? Because they could. This is waste and allocates $$$ to the wrong basket. This sort of thing will end as the dollar continues to devalue.

So far as taxation is concerned, as I (and 99% of the rest of the American citizens) don’t have allot to lose I’m a bit of a populist on this matter. Do most of us care whether we drive a BMW or a Ford Focus? Ttruthfully yes, but when put in contrast against an economic meltdown I think we can all make due with the Focus especially since the Jones’es will be driving a Focus also. There are vast sums of wealth out there in the USA and a little devaluing of these funds for the sake of the have nots finding and keeping a job is not such a bad idea. There are, of course, other opinions on the matter but as the technical traders will tell you…go with the trend!

I don't think this Marxism vs. Libertarianism argument is relevant at all. Neither are pragmatic solutions. Both are political ideologies masquerading as economic theories.

I object to the libertarian notion of "liberty" and "freedom" being attached to their economic theory. This is a religiously fundamentalist view of capitalism and markets. And it's pure nonsense. I'm an avid fan of Adam Smith. People forget though that his justification of free markets is based on utility. He posits greed as good only in the sense that it provides a collective good. It's a statement against using the government to impose laws based on what people believe is right and wrong. I don't think it's right to use government to provide stimulus, I think it's necessary as consistent with my comments in #5.

To state that the government created this economic problem is to rewrite history. Actually, it was deregulation and private corruption that caused the problem. Fannie Mae and mortgage lenders lobbied for the removal of regulations for the purchasing of risky debt securities in 1998. Although it was under the auspices of encouraging home ownership, the truth was that they believed they could make money off of it.

And the '29 crash was caused by lowering interest. Any Keynesian will tell you that during boom times you need to tighten money supply and raise taxes to avoid bubbles and pay back debts. But during recessions you do the opposite. The government needs to play an active role, but that role must be guided by a principle of utility, not an abstract Lockean principles of freedom. Nonsense on stilts.

As for the Soviets, their model failed because, as others have said, lack of innovation, too much centralization, etc. Although they did grow the economy (and that counts because that was the original challenge) it was at the expense of quality. Soviet steel was crap...but they did produce a lot of it.

The ultra rich for the most part have already skipped town or are in the process due to excessive taxation (trusts, family foundations, off balance sheet assets, accounts in the caymans). The people who get burned are of course the people still working hard for themselves. I hate to take John McCain's Joe the Plummer guy here as my example, but the HEBNYR (high earner but not yet rich) are the ones who get burned the most. Most americans are not populist. Most americans feel overtaxed (whether they pay any real taxes or not).

If the people with the money leave then innovation leaves and services leave and soon the few people who are left become an angry mob with no one to blame but themselves. This is what happened in Africa.

In response to the original question, the most obvious example in American history was government spending during WWII and the postware economic boom. Of course proving causation is difficult.

The interesting thing is that while a lot of the end products of this labor were intended for the battlefields of Europe and Asia, war spending may have been more effective for the economy than direct welfare spending in the New Deal or the Great Society.

Even given some past success with deficit spending, most people other than paleoliberals and neoconservatives agree that the national debt is now way too high and needs to be reduced in order to achieve economic health (not "growth", the government trying to micromanage and pump up growth has proven extremely dangerous).

Your point is still taken. Whenever a government entity has been successful at converting taxes, natural resources, or a monopoly situation, the benefit has been returned to the owners (citizens). In modern times, executives and politicians seem to use their talents and government protections garnered through lobbying to achieve personal gain at the expense of the taxpayers.

While unemployment has gone up generally in Canada, the Quebec city area has seen unemployment rate going down, employment rate going up, and GDP has had unprecendented growth. The reason? 100 milions government investments in the 400th anniversary of the city. While tourism has been a miserable industry in Canada (due to many factors, among them an unfavorable exchange rate), Quebec city's hotels and restaurants had to refuse clients all year long.

Many buisnessman in the tourism and entertainment industry are now asking for a special tax to repeat events similar to those of the 400th anniversary.

Want one more? The construction of the trans-canada railway is directly responsible for the economic growth of the canadian western provinces in early 1900's. Before the railraod was built, the natural resources of the west were impossible to gather and bring to the populated eastern provinces, or shipped to europe. One could easily estimate that 90% or more of the economic activity of western canada wouldn't exist today if the then govt had stolen the taxpayers money to fund the construction of that rairoad. And btw that's trilions of $$.

You know, governments, with all their imperfections, don't exist sorely to piss people off. If governements didn't do it, nobody would have built the first roads, airports, sea ports, water treatment facilities, etc... Imagine trying to trade goods and services without communication infrastructures. US would resemble zimbabwe or Cameroun.

Governmental intervention pulls capital from efficient private capital arkets and moves it to ineficcient public ones. In socieities with "free" health care, what do you get?

The private markets aren't working because the cost of capital has been made artificially low. Real interest rates are closer to 10%. At that level, you would see plenty of private capital enter the market. If bailout $ is going to be used, it sould be a direct homeowner refinance plan. Keep the banks out if it. Let them fail

This is great! I must have known I was getting ganged up on even in my sleep, since I woke up to pee, checked my stocks, came over here and i see some quite amusing posts. So let's tackle a couple right now.

Let's start with amassafortune, who notes the following government successes:

1. The oil pipelines. Who built them? The government? Or did the government hire contractors (soft fascism) to build them? Were oil pipelines never built without government? Hmmmmm.....

2. The Panama canal. Have you ever read about the building of the Panama canal? And the Left mocks Libertarians for not caring about the worker! Ha! Is the Panama Canal a great thing? Heck yeah it is. And so are the Pyramids, although admittedly less useful to us, it was extremely useful to the Egyptians (at least they thought it was). And by the way, who built the Panama Canal? Bureaucrats and planners? Or was it contracted out? Honestly, I don't have the answer to that, but I bet with a little academic research that one would unravel too.

3. The G.I. Bill. Henry Hazlitt teaches a wonderful lesson in "Economics in One Lesson" - again, I can't stress enough that you should read it. He says, the goal of judging economic policy is not by looking at its effects on one group that received the benefit, but rather studying the LONG TERM EFFECTS ON THE WHOLE SOCIEY. I'm an ex-jarhead, and I used the GI Bill at one time, but even with my tiny cranial capacity I can do the simple math that the GI Bill benefits the State and the few Veterans who use it wisely at the expense of the taxpayer, business, and society as a whole.

4. Rural electrification - you mean the Tennessee Valley Authority that just caused yet another environmental disaster courtesy of the world's #1 polluter, the U.S. Government (now that the USSR isn't around to melt down their own nuclear reactors).

5. Food safety - you're joking right?

6. Immunization programs - here we get into the Medical-Industrial Complex, a fun little joke perpetrated on unwitting Americans and Europeans. Big business and government married together to convince you, from the time you walk into their Socialist run schools, that only the government cares about you. Only the government will take of you. Have any of you ever been to a VA hospital? That's what socialized medicine looks like. Brace yourselves. You don't even trust the government to serve your food, or even deliver your mail (for good reason). Why do you think they can treat you better, without a rational pricing system, than private entrepreneurs can?

You're next my friend. You actually raised some interesting questions. But first, you have to validate some of your claims.

"One could easily estimate that 90% or more of the economic activity of western canada wouldn't exist today if the then govt had stolen the taxpayers money to fund the construction of that rairoad. And btw that's trilions of $$."

If that were true, that would be great. I don't know the facts of the case either, but I could also easily claim that a private enterprise could of done the same thing, had they been allowed to. I am assuming that the government program hand-picked the business (politically connected) that built that railroad. But, hey, look it up and get back to us. You made the initial claim.

The GDP argument you listed was refuted above. An infusion of capital from government by inflating the currency increases GDP, but does absolutely nothing for the economy. It just increases the money supply, which destros purchasing power. Every government injection of capital must by necessity be a net loss.

As for the reasons that governments exist, let me pose a question to you: if the government ceased to exist, how would your life change? Is that a question that you've ever seriously contemplated?

The interesting thing is that while a lot of the end products of this labor were intended for the battlefields of Europe and Asia, war spending may have been more effective for the economy than direct welfare spending in the New Deal or the Great Society.

Here is a question for you, if "war spending" is good for an economy, wouldn't that mean that we could solve all of our economic problems by going to war? How many countries do we have to bomb to improve our economy?

Let me answer your objection to having freedom and liberty tied to an economic theory. In a free market, who determines what goods are produced? Can the producers decide what they produce? What happens if a producer, whether it's of steel or microchips, produces a product that no one wishes to buy? Can that producer force people to buy that product? Can he confiscate 30-50% of the population's income upon threat of imprisonment if they don't buy his or her product?

Of course, the answer is no he/she can not. The entrepreneur must answer to the consumer. Otherwise, he'll go out of business and be replaced by someone who does. Now, does that sound like a society that flourishes with liberty, or not? Are you starting to detect the relationship between the two?

Now consider what happens in our society. Faced with a consumer that no longer has the desire to consume X product from Y industry (automakers are in the news, but this has gone on since before the days of Kings), what do the producers do? They call their buddies in government, and forcefully extract money from the taxpayer (it is force if noncompliance means jail) to finance the production of a product that they don't want. Does this sound like a society that flourishes with liberty, or not? Heck, at least give us a freaking car for our money. We didn't even get that.

You note, astutely that Fannie Mae was heavily involved in our recent troubles. Who created Fannie Mae? What is this organization's relationship to government? What implicit guarantees were made on their behalf? Who are the officers of the company? What candidates did they donate to? The answers to those questions make my case, but I'll let you decipher them.

My support for free markets is not a faith at all. Free markets work. They maximize production. THAT is the goal of society, not full employment. Full employment is an easy problem that can be solved at the point of a gun. I can make people work, if you give me enough power. MAXIMUM PRODUCTION, however, can only be achieved through the VOLUNTARY EXCHANGE of goods and services between two parties. And those two parties only come together to make that exchange (both producer and consumer) because they determine that it will benefit them.

I am reminded of a quote: "No people are more hopelessly enslaved than those who falsely believe they are free."

David in Qatar, I have to say that your last "rebuttal" is less an argument than a jumbled mix of insinuations and non sequitors. Although your disdain for the government (which amazingly happens to be both Fascist and Socialist in nature) is perhaps not unfounded, amassafortune's examples are all substantive examples where government involvement created social utility. (And I say social utility because economics is the study of production, distribution AND consumption; however it is possible the blog owner meant to restrict the conversation only to GDP growth.)

Regardless, to dismiss out of hand these legitimate examples with rather irrelevant criticisms does little to advance this dialogue. For example, I fail to see why the fact that the government contracts out its project prevents it from meeting the questions original criteria (in that it is tax-funded and government directed). I doubt anyone expects Obama and Congress to personally build the infrastructure called for by the upcoming stimulus plan, yet this seems to be exactly the kind of government involvement DaretothREdux wanted to address. Similarly, negative externalities like pollution and bad working conditions are at least as common in completely private enterprises so that fails to prove that government non-intervention is somehow preferable.

I didn't mean to write this much and I think that both sides have raised legitimate points; however I feel that respecting other's thoughts requires making a real effort to substantively address their points, rather than simply waving them away point by point. Having said that, I realize I have not addressed your arguments, but I already wrote enough and that wasn't my motivation in the first place. However props to DaretothREdux for stimulating this discussion and everyone for contributing; I have enjoyed it very much and hope to continue to do so (from the sidelines).

I agree that it's tough to make an argument the way I did in Post 39. Unfortuanately, I chose brevity so that I could address what I felt were more pressing arguments. Again, I didn't question the utility of the projects.

I'm curious, why do you find it amazing that someone would despise Fascism and Socialism? Am I supposed to pick between the two as one to champion? Besides, as many have noted, the economies of fascist, socialist, and totalitarian governmens all behave the same. Without a rational pricing structure, central planning inevitably collapses.

As for the role of contractors, don't be so sure that contracted businesses are private enterprises in the sense you were taught in school. In fact, many have made the case that they are even worse, both economically and politically, for a society than employing strictly socialist labor techniques. I'll let you chew on that for a while.

An interesting discussion. I see some points being brought up to defend Mises against reality. I can't answer all of them, but maybe I'll respond to some.

1. Ask yourself, how would the central planners deal with change?

A rhethorical question that should be in the same category as "how would patients deal will poor healthcare", "how would workers deal with lower wages, how would Norvegians deal with cold weather", etc. Dealing with change is always hard for everyone. It's never easy for capitalists, and it's never easy for central planners either.

"Would central planners embrace new technology that altered the amount of labor for each product? "

Why not?

"And once that new technology was discovered (if a planned society could even develop a new technology outside of weaponry), how would it be implemented without upsetting such a delicate balance? "

By upsetting such a delicate balance. Your argument reminds me of an explanation why a bumblebee can't fly according to the laws of aerodynamics. Apparently, aerodynamics allows bumblebees to fly, since they somehow manage to do just that :).

How would it's supplies and the new products that this new technology bring about be rationally distributed?

Again, one can think of many ways to distribute them. One way is by drawing a lot. Another way is by using money. I don't know where you got the idea that socialism=abolition of money. Soviet leaders never said anything of the sort. The abolition of money would come with communism, but under socialism, money would still perform its function, according to the Marxist dogma. The third way is by estimating the marginal return (in terms of productivity as measured by man-hours) of the new product at factory A vs. factory B, and sending the product to the factory that can utilize it better. Another way is by rewarding the factory that showed a better performance versus its peers. Let's say, you have two car factories. Each factory was given the same amount of metal, the same number of workers, etc. At the end of the year you find that consumers prefer to buy the cars produced by factory A. So when a new piece of machinery is invented, you send it to factory A, because this factory is more likely to put it to good use.

"This is a major problem for the LTV crowd, and maybe one you've never considered. LTV assumes a static world."

Actually, it doesn't.

"This is not surprising. People that are most susceptible to the lure of Marxism do not like change."

Not true. The goal of Marxists is to boost economic output, and that clearly requires change.

"In Socialist writings, the call is always to a Paradise Lost, of ancient pre-Capitalist days."

Again, I don't know what socialist writings you refer to. The ones I had the misfortune to read were unanimous in giving feudalism very low marks. A transition from feudalism to capitalism is always a welcome development to any socialist of Marxist persuation.

"Of course, all these calls are the same calls that those same ancient people had also been saying for centuries and centuries ad infinitum. "

Again, please don't confuse Marx with Saint Simon, Fourier, Russo, and other back-to-nature utopians. They are very different.

I forgot to mention the internet. If you can argue it was not a government-sponsored instrument of growth, mail your rebuttal to each of us.

Opportunity cost - probably the most valid counter-point. As investors, we have been paying close attention to that mental calculation. Most of us have decided not to move into a safe 2% CD for the next few years. Sometimes you just have to go for it, even if you are in a position of power and using taxpayer money.

Panama Canal - Chief engineer John Stevens was very sick himself for much of the project. Despite unrelenting criticism, and not being positive himself if it would all work out, he made it happen. He was a great public servant. Thanks for the other references. I'll check them out.

I think the Native American casinos may be very good examples for this discussion. Some look like socialist entities and some look more capitalistic. The Connecticut models, Foxwoods and Mohegan Sun, pour much money back into the tribes. Members get a share of the profits and can make even more by working. Health and education are a concern of the leaders who are doing a pretty good job of using their power for the greater benefit of the group. Farther west, small casinos dot the great lakes areas. Some of these have a few top leaders who skim off profits for themselves and let out-of-power members scrape by on their government checks. Getting public benefit out of taxpayer money seems to be universally related to the character of the leaders.

2. "The 2nd problem with the Labor Theory is that it ignores differences in the quality of labor."

The Labor theory recognizes these differences, but it accounts for them by operating with the averages. Here is an analogy: to know the temperature in the room, you don't need to measure the speed of each molecule.

"All this would never happen in Engels' world."

Again, I don't see it that way. In Engels' world, workers from underperforming industries would simply be shifted to more productive occupations. Realistically, what would happen in the Soviet Union is that Unix schools would be told to reduce new enrollment, Windows schools would be told to increase enrollment, and new students would be taught as Windows programmers. It is true that existing workers were often kept at the same jobs (much like GM workers today), but that was the specifics of this particular Soviet regime. It would NOT be against Marxism to shut down a factory that's no longer needed.

3. "In a free market, who determines what goods are produced? Can the producers decide what they produce? What happens if a producer, whether it's of steel or microchips, produces a product that no one wishes to buy?

One will have to consider the reasons why no one wishes to buy it. Perhaps they would wish to buy it after all, if they had a few pesos in their pocket, but all their pesos were aready expropriated by other producers in the name of efficiency. (This does not apply to America, but it certainly applies to Mexico, Nigeria, and others).

Can that producer force people to buy that product?

With commercials, yes. You invade their brain and force them to buy crap they don't need.

Can he confiscate 30-50% of the population's income upon threat of imprisonment if they don't buy his or her product?

He can bribe the government, and the government will do just that. That's why, for example, European pharmaceuticals never seem to be able to get an approval from the FDA, Indian cars are denied entrance to the US market because some offical declared them as "too dangerous", etc. It's a rare American business that does not rely on the sheriff to keep competitors out.

"MAXIMUM PRODUCTION, however, can only be achieved through the VOLUNTARY EXCHANGE of goods and services between two parties."

Ever heard of the game theory? A group of individuals who are free to promote their individuals interests may easily wind up acting against their interests because the actions that are perceived by the individual as being the most efficient will backfire if every other individual is choosing the same course of action. So color me skeptical.

"Here is a question for you, if "war spending" is good for an economy, wouldn't that mean that we could solve all of our economic problems by going to war? How many countries do we have to bomb to improve our economy?"

Of course not, the US in WWII was just one example where the correlation between war spending and immediate economic growth proved positive. The surrounding variables were critical, including low employment (few women in the workforce) and relatively low debt at the start of the war.

That’s a very nice outline. I am going to have to see if I can’t distill this blog. The topics covered in this one have been vast and varied. Possibly, I can break it down into a few smaller succinct discussions, but nevertheless I appreciate all the branching off that has occurred.

In reference to comment #32, all I can really say is that when you allow the government to devalue your currency you are also allowing them to decide where you can spend it. It might sound good in principal to spend more money within the U.S. but that’s really no better than forcing everyone to buy Soviet goods in the Soviet Union. If other countries can offer a better product at a cheaper price I should be allowed to purchase that product and keep the left over profits to do something else with (like start my own business).

More than one person has won the Nobel Prize for showing the link between economics and freedom. It has been proven time and time again that they are in fact link in a number of ways. I think the mistake is to assume that the government is interested in the common person as opposed to advancing its own power. Any time I hear Ben Stein (or any other so-called economist) telling people now is not the time to be an ideologue, I simply want to say, “When is the time if not when the most people are hurting?” Pragmatism is great in dealing with every day affairs but not so great in a macroeconomics. You start to be pragmatic enough and before you know it you are advocating the killing of the mentally retarded to save the state money…

To state that the government created this economic problem is to rewrite history. Actually, it was deregulation and private corruption that caused the problem. Fannie Mae and mortgage lenders lobbied for the removal of regulations for the purchasing of risky debt securities in 1998. Although it was under the auspices of encouraging home ownership, the truth was that they believed they could make money off of it.

This is completely false. Fannie and Freddie were already under then control of the government before they started lobbying for those things, and those practices started with Jimmy Carter’s presidency.

We built or own RR in this country back at the beginning of the century and were quite effective at it. They only got out of control because the government gave them free land! And way too much to make it fair for any up and coming RRs (which lead to the first American monopolies). RRs were already going to be a profitable venture whether the government got involved or not and they would have been built out of necessity even if there had been no government in the U.S. or Canada.

Again, I may have to concede that the government can cause “growth” when they are given just enough control, but you must also concede that to do so we will have to give up our liberties, no? Also, although this would be very difficult to prove, I think it can be argue that a private industry will always create more growth because they can stay focused and leave politics out the business model (at least until the government starts handing out money to their competitors).

I must also add that socialism seems very cold. It seems to pragmatize everything and break it down into numbers and statistics. Have you ever read the short story The Ones Who Walk Away From Omelas? I would recommend it highly.

Also, I think you need to quit confusing Mexico with a “free” society. They have one of the most oppressive government on the planet (like Venezuela) and it doesn’t matter what they call their form of government if they don’t practice the basic tenets of said government.

It's a rare American business that does not rely on the sheriff to keep competitors out.

I can’t really argue with that. The sugar industry v. the corn syrup industry is much the same. But I would argue that under a libertarian government you would allow for completely free trade across all borders regardless of government or regime. Free markets will lead to a free society. I believe it’s coming for the Chinese.

Indian casinos is definitely something that I had not considered, but I would argue that they are under the protection of the US government without having to pay taxes. They get the best of both worlds!

I Love this! Donya , in Saudi Arabia, I agree that too much government is not going to do us any good on any level with freedoms or the economy. But let the government do what it can. I think the idea of creating job is a good one. It puts people to work, puts money in their pockets to spend and puts them back on the tax rolles. But doing this should be done intelligently. Small businesses are the answer but to do that the government needs to be somewhat involved. Maybe extremely low intrest rates for small businesses. Startups and exsisting. I don't mean Obama's idea of small businesses. He things small is 250,000 dollars. Thats just getting started. Hello. Tax incentives is a good Idea. Small business put people to work and moves the economy. I liked the idea of the government putting people to work on projects too. Like repaving roads, building parks, remodeling government businesses. These projects bid on and aquired by small business that are local to the area where the work is being done, but none of this " They have to be owned by a women or a man, or a minority, or that stuff. The only qualification is that it is a small local business. They can be created all over the U.S.

What a glorious morning! I wake up to see a wholescale discussion has grown up surrounding central planning vs. the entrepreneur, as if the 1920s and 1930s debates are being replayed right before. And I see the same arguments being proposed by zloj as those presented in those days.

First, I'm going to wax philosophical for a minute and share my understanding of reality. Anyone who writes on a comment board can make any personal claim, thus making all personal claims pretty worthless. But here, on this board, I've written a small novel of ideas down and anyone can go back read through them. If at any time my ideas are lies, or I intentionally misrepresented someone's opinion or idea, or i intentionally engaged in dishonesty, my entire credibility would be destroyed. I would be attacked ad homeninally relentlessly and exposed as a phony.

Thus is the delicate balance of those who weild the weapon of honesty. Truth is a weapon of power, indeed. But maintaining credibility is so difficult that most choose the easier route of misreprentation, intellectual dishonesty, and outright lying. Anyone with practical experience in any society at any time in history has seen this first hand.

So, I'll assume that in the eyes of the readers I still have credibility, and thus I can address the claims that I don't live in reality, nor did Mises.

Reality for me is that for most of my life I have worked directly for or alongside the government in a civilian capacity for 20 years. In my experience, people who work for the government fall into two categories, those who work in America, and those who work overseas. Those who work in America, whether they are in the civil service, the military, the police, politics, etc. rarely, if ever see the effects of US government policy. They are very patriotic. They see the government as an entity designed to help them and further their interests. And in a way, sadly, that is true. The government does indeed further their interests, at the expense of private concerns, at the expense of liberty, and at the expense of foreign peoples.

Those of us who work overseas see an entirely different reality. Thankfully. Of all the horrible things that the U.S. empire has wrought on the world, the one silver lining has been this: by stationing 544,000 uniformed soldiers overseas in 130 countries on 700 bases, combined with 2-3 million American contractors, the U.S. government has exposed each and every one of them to the dangers of central planning, and government in general. This is why support for Libertarians like Ron Paul is so high among troops and contractors overseas. It's just as high and from all indications, higher today as it was before the election. For Republicans, believing that they are the true patriots fighting a war that no one else well from the comfort of the NASCAR track, this is infuriating. For the Daily Kos community, it is much more disturbing.

Such is the the reality of the world. It's not only how you see it, but what you actually see.

The government did indeed create the Internet, as a weapons project in the 1950's. It was the DARPA-net. I know all about it. From the 1950's until the early 1990's you saw what growth, change, and innovation the government brought to the Internet, a system of which they classified a large majority to keep it in their hands. Why would they share such an idea with anyone else? What would be their motivation?

You may think that private entrepreneurs would never have conceived of such thing. You don't read much science fiction. Check out a book called "Ender's Game" by Orson Scott Card, written in the 1970s which describes the Internet, and this very chat forum in such incredible detail that it seems he invented this crazy thing.

The government did indeed invent the Internet, and in about 3 days after it was finally given over to entrepreneurs they surpassed all of their innovations and creativity of 40 years. The Internet may not exist as you see it today, without the government, it would be something like it, only a hundred times better. It worries me that a person as well read as you would believe that the government is the seed of innovation and would say sarcastically, "mail in your respose." If I showed that to the troops and Americans overseas they'd get a good chuckle out of that. I guess their reality is different than yours.

zloj,

I'm glad you've taken the time to investigate the criticisms of Mises. Until yesterday, you had clearly never heard of him. Then you laughed him off as naive, then you felt compelled to write a small novel of criticism. You are growing intellectually and that's good. Unfortunately, you missed the whole point of Mises criticism. Among the many observations of central planning that make it difficult, Mises argument is so devastating because he assumed that Socialists/Marxists could actually know everything, and every price, and yet he proved that it wouldn't matter. It's a question of CALCULABILITY. It doesn't matter what knowledge the supreme socialist planning board has, it doesn't matter what money they use, there is no pricing mechanism. All goods transfers are internal transfers in any system you've described, or Engels, Marx, Fourier, Lange-Lerner, etc etc etc, and therefore are not priced in an open, competitive market. And if the consumers are driving the demand for a product, guess what? That's called capitalism. That's what was most stunning about your argument, is that after you describe how such an issue would be dealt with, you almost described a capitalist society LOL, but then you stopped yourself.

I can go into CALCUBILITY if you'd like, but you'll look it up, read the Daily Kos's rebuttal and come right back at me with something that was refuted 75 years ago, and we'll do this all over again. And as much fun as that is, I can't say I have all that much time to spare on this subject.

If I do go further with this, I want to do it because the blog readers want to undersatnd it. If you do, I'll continue for as long as you'd like. Sharing this knowledge with those who thirst for the truth is worth more to me than anything else I have except my work and family. This is my most passionate hobby.

If Obama really wants to grow the economy he needs to abolish the income tax (corporate and private) immediately, and then scale back government spending to match. He can also get rid of Sarbanes-Stupid-Oxley and the capital gains tax.

Give the money back to the people who earned it and see if they can't find more useful things to spend it on. Trust me, many of them could use a few extra thousand dollars to start up business and create a few jobs.

We don't need a band-aid to stop internal bleeding, or stronger medicine to fix our addiction. We need surgery. We have a cancer and it needs to be cut out before it kills us.

David,

I will listen and learn as long as you have time to dedicate to posting here. If you started blogging on the subject every single day, then I would read it every day. I have already sent to of my friends (one Libertarian RP supporter and other apolitical) to this very thread telling them that it is the most enlightening discussion I have read in months if not years.

So to summarize the main element related to the blog author's original idea:

Yes, the government can direct investment, but only by taking the same amount of funds from the private sector in some form of taxation. Once the bureacratic maze of public investment is added to the cost,plus the additional loss from taking capital from more efficient investments and putting them into less effecient investsments are accounted for, every single government initiative is shown to be a net loss for the overall wealth of the nation.

See "Economics in One Lesson" by Henry Hazlitt for a better explanation of this concept.

Yes, the govenment has created massive projects in the past, at massive expense, projects that entrepreneurs may not have created (what is an entrepreneur going to do with a nuclear bomb, for example? Nuke the people that don't buy his product?), but the reason that government stepped in is because there was not enough demand from consumers, otherwise entrepreneurs would have done it themselves. The government then spends the next century convincing everyone that we really needed those things in the first place, though as we've seen, that isn't always true. And if the need eventually did arise to build a canal or a highway, or a power plant etc, private entrepreneurs would have filled that role had the government not made it illegal.

In a free market, consumers drive demand. That is why liberty is best protected in a free market, with a complete separation of State and Economics. This is a relatively new idea, only a couple hundred years old.

The behavior of Socialist/Marxist/Fascist/Totalitarian economies are all very similar.They all rely heavily on central planning. They all distort market prices, and eventually destroy the pricing mechanism. All of those economies eventually crumble. We have been moving in this direction for a long time, at least since the Civil War married government and banking interests over 150 years ago.

Sound calculability also means the lack of price controls. Any operation which the government partakes in has to either mimic a free market society (no longer possible if the entire world is Socialist, since there will be no free markets and then all goods will be internal transfers), or set a price in accordance with the whims of a Capitalist that wants to crush competition, or a bureaucrat that arrogantly thinks he/she know what the price of X product should be. A good read on this is a book called "Four Thousad Years of Price Controls" by Thomas DiLorenzo

I have read this entire discussion and found it quite interesting. You all have strong opinions that are obviously based on much reading. The world is very complex and all of you have good points. The various governments have their pros and cons. None is good or bad in it's entirety. Unfortunately greed leads to corruption of the best intended governments. Hopefully respectful discussions will lead to greater understanding. We need to be open to listening to other's points of view. That is difficult though as we spend considerable energy defending our own point(s) of view. It is good on the rare occasion when we can find common ground. Thank you for the great discussion. Please continue to keep it civil. It is so refreshing to read an argument that doesn't rapidly devolve into name calling. Good night Gentlemen and Ladies.

The government also thinks that it "knows best" when it comes to the supply of money in the system. If we apply the same free market principles to our money than you start to see the Federal Reserve as absolute nonsense. Why do we think that one man (Helicopter Ben) can determine what interest rates should be for banks? If competing currency were allowed then interest rates would determine themselves based on demand for each particular type of money. Fiat money (paper currency with no backing) would be destroyed by money back by gold, uranium, or whatever in no time.

Which is why though we are currently experiencing deflation, inflation is inevitable as long as you continue to print money.

It's not Helicopter Ben's fault. The people want to believe that he knows what he is doing. And if not him, because of his political affiliation, than someone in their party KNOWS what to do! Here we can again assess the issue through calculability. The hundreds of factors and risks that are assesed by the entrepreneur using the pricing mechanism are non-existent for Paulson, or whatever Democrat appointed official is replacing him. They have no personal stake in the operation, so all they will do is make a subjective, superficial evaluation of the problem, heavily influenced by their political and business affiliations, and pee away billions upon trillions.

I'm glad this discussion is being handled here on TMF. It's the perfect setting for my next point.

Joint Stock Companies as we see them today with Company Law and a Board of Directors (not beholden to the shareholder of the entrepreneur) - those horrible evil corporations that seem beholden to no one - are the creation of Socialists.

An excerpt from Mises' 1922 book "Socialism" follows. It's prescience is frightening.

"One of the currrent fallacies of socialism is that joint stock companies are the preliminary stage of the socialist undertaking. The heads of joint stock companies - it is argued - are not owners of the means of production, and yet the undertakings flourish under their direction. If, in place of the shareholders, society should assume the function of ownership, things would not be altered. The directors would not work worse for society than they would for the shareholders.

This notion, that in the joint stock company the entrepreneur-function is solely the shareholder's and that all the organs of the company are active only as the shareholders' employees, pervades also legal theory, and it has been attempted to make it the basis of Company Law. It is responsible for the fact that the business idea, which underlies the creation of the joint stock company, has been falsified, and that up to today people have been unable to find for the joint stock company a legal form which would enable it to work without friction, and that the company system everywhere suffers from grave abuses.

In fact there have never and nowhere been prosperous joint stock companies corresponding to the ideal etatistic jurists have created. Success has always been attained only by those companies whose directors have predominant personal interest in the prosperity of the company. The vital force and the effectiveness of the joint stock company lie in a partenership between the company's real managers - who generally have power to dispose over part, if not the majority, of the share-capital - and the other shareholders. Only where these directors have the same interest in the prosperity of the undertaking as every owner, only where their interests coincide with the shareholder's interests, is the business carried on in the interests of the joint stock company. Where the directors have interests other than those of a part, or of the majority, or of all the shareholders, business is carried on against the company's interests. For in all joint stock companies that do not wither in bureaucracy, those who really are in power always manage business in their own interests, whether this coincides with the shareholders' interests or not. It is an unavoidable presupposition of the prosperity of the companies, that those is power shall receive a large part of the profits of the enterprise and that they shall be primarily affected by the misfortunes of the enterprise. In all flourishing joint stock companies, such men, immaterial of what their legal status is, weild the decisive influence. The type of man to whom joint stock companies owe their success is not the type of general manager who resembles the public official in his ways of thought, himself often an ex-public servant whose most important qualification is good connection with those in political power. It is the manager who is interested in himself through his shares, it is the promoter and the founder - these are responsible for prosperity.

Socialist-etatistic theory of course will not admit this. It endeavours to force the joint stock company into a legal form in which it must languish. It refuses to see in those who guide the company anything except officials, for the etatist wants to think of the whole world as inhabited only by officials. It is allied with the organized empoyees and workers in their resentment-ridden fight against high sums paid to the management, believing that the profits of the business arise of themselves and are reduced by whatever is paid to the men in charge. Finally, it turns also against the shareholder. The latest German doctrine, "in view of the evolution of the concept of fair play," to let the sharholder's self-interest decide, but rather "the interest and well-being of the enterprise, itself, namely its own economic, legal and sociological value, independent of transient majorities of transient shareholders." [citation included in text] It wanst to create for the administration of the companies a position of power, which should make them independent of the will of those who have put up the majority of the share-capital.

That "altruistic motives" or the like are ever decisive in the administration of successful joint stock companies is a fable. Such attempts to model Company Law after the illusory ideal of etatistic politicians, have not succeeded in making the joint stock company a piece of the illusory "functional economy",; they have however damaged the joint stock company form of enterprise"

So, would it fair to assume that the best companies to invest in are those whose CEO and upper level management are paid in shares of stock? Does this mean Wal-Mart is a better company for offer stock to all employees at a discount?

I'm not sure, but I think it's interesting. Many intelligent investors that have never heard of Marx or Mises, have noted that companies with large insider ownership outperform their peers for exactly the reasons that Mises just stated in my post above.

First, a side note. I did say that Mises did not live in reality. Ascribing to me the statement that YOU did not live in reality, nor did Mises, introduces a subtle difference. OK, let's live it at that. My issue is with this paragraph.

"All goods transfers are internal transfers in any system you've described, or Engels, Marx, Fourier, Lange-Lerner, etc etc etc, and therefore are not priced in an open, competitive market. And if the consumers are driving the demand for a product, guess what? That's called capitalism. That's what was most stunning about your argument, is that after you describe how such an issue would be dealt with, you almost described a capitalist society LOL, but then you stopped yourself. "

Again, if you want to criticise socialism, let's criticiize it for what it it. Socialism DOES NOT reject money, personal property, or exchange of goods at market prices. Socialism means simply that the state owns the means of production and has the opportunity to listen to market signals where the market is right, or ignore these signals when the market is clearly wrong. And the basic premise is that the market IS wrong most of the time. Here is the main ideological difference between Marx and Mises. Mises feels there is something sacrosanct about free market so that each verdict made by that market is indisputable like a divine revelation (or like a decree from comrade Stalin). Marx, on the other hand, suspects that the market is wrong most of the time because when Mises's free individuals freely excercise their free will, 90% of their effort will go not into production, but into various clever schemes designed to steal a dollar from one anohter. In this respect I think Marx was right and Mises was wrong. You may disagree.

"Until yesterday, you had clearly never heard of him."

I did, actually, and had a vague idea of what he was all about. With the info you provided, I now know better and have a much clearer idea, but it basically reinforced what I believed to be the case.

" Then you laughed him off as naive, then you felt compelled to write a small novel of criticism. You are growing intellectually and that's good."

Well, I am always trying to grow intellectually. :)

"Once the bureacratic maze of public investment is added to the cost,plus the additional loss from taking capital from more efficient investments and putting them into less effecient investsments are accounted for, every single government initiative is shown to be a net loss for the overall wealth of the nation."

The fallacy of this argument is in the assumption that every dollar you give to Bernie Madoff goes into some efficient investment. You don't consider the possibility that the number of effecient investments is really not so large that Bernie and his friends could not run out of investment ideas well before they get hold of 50% of the country's resources.

"Any operation which the government partakes in has to either mimic a free market society (no longer possible if the entire world is Socialist, since there will be no free markets and then all goods will be internal transfers)"

Yes, that's a serious objection, but fortunately, there is no threat of socialism taking over the whole world. Realistically, there will be enough individuals who believe in free markets to provide us with some countries and entire continents that are run along capitalist lines, so there will never be a shortage of data. If there was, you can always force some of your people to live for a year in some province that you set aside for a capitalist experiment. You can administer it as some sort of income tax or an army draf, or, better yet, just recruit volunteers by presenting it as a kind of extremal sports and a challenge ("spend a year in a capitalist society and come back to tell the story" ) :):):)

My response is not as stupid as your response implies. Where Chrysler is now has nothing to do with goverment intervention in 1979. Chrysler repaid its $1.5 billion loan from the government four years later with interest - seven years ahead of schedule. Chrysler returned to profitability and tens of thousands of jobs were saved. Tax payers made a profit and avoided funding massive unemployment benefits had the company gone under. The company returned to profitability and introduced many successful product lines. As you can see in this graph from Barry Ritholtz, Chrysler market share increased until 1996 despite increased Japanese and European competition. The problems it faces today are the result of more recent mismanagement and ineptitude exhibited by all of the Big 3, not government intervention.

Great discussion all. I know I'm a little late to the game. I generally agree with the free market theory. However, lets not forget the downsides of free markets. Did we not have a "free" market when slavery was in place? Was it not the government that ended slavery? What about child labor? I could go even more into all the civil rights hurdles we've had to overcome via government intervention but that will start an even more controversial discussion. My point is the government serves a good purpose interfering in business when it comes to setting checks and balances and making sure the "little guy" isnt screwed.

First off, let me say Go RAVENS!! I'm not a Baltimore fan, but I have them in my weekly pool. Awesome win.

Now, on to more important subjects. I want to address Mises' reality and Madoff.

The idea that Austrian School economists don't live in reality is often amusing. In the case of Mises it is more tragic. His life shows just how little we understand of reality. Our world is much simpler today than his way.

He was the Chief Economic Advisor of the Austrian government in the 1920's but was forced to flee his homeland due to Nazi persecution and emigrate to America. He was persecuted for critizing the Nazi Soclialist Party's economic policies.

The case of Madoff has many marginal free market thinkers running for cover. For those of us with understanding however, it makes our point.

Madoff is a horribly corrupt individual that perpetrated a massive fraud. These people come in all shapes and sizes and in all walks of life. Notice how I did not once, during my entire argument (of some 10-12 posts) pick out one individual in government to make my case. There are thousands. I could've brought up the corruption of a Blagojevich, or the blood-thirsty nature of a Lenin or Stalin. There is no need to try to make a case for your beliefs due to anecdotal evidence. My beliefs rests on a foundation called the Principle of Non-Agression, which I will discuss more when I get to slavery.

In the case of Madoff, many private companies hired by private individuals had sounded the alarm on his activities. Some had even asked, pleaded with the SEC to look more closely at his activities. These investors, warned by these risk-analyzing companies, chose to put their money elsewhere and were saved. Here we see the private business once again doing what government is unable to do: account for risk. The SEC, no matter how much money and power we give it, will NEVER be able to shield investors from risk. It is impossible. Again, it's a question of calculability. The SEC operates outside of the priced market. It's choices on when to intervene, when to investigate, and how to act are not driven by price calculation. Instead, they are driven by politics and connections. I know that I slept better at night when Martha Stewart was behind bars. (sarcasm intended)

"Again, I may have to concede that the government can cause “growth” when they are given just enough control, but you must also concede that to do so we will have to give up our liberties, no?"

I agree. When the state owns so much property, it gets officials into that mode of thinking where they can get away with any decisions they make and the masses just have to obey.

"I think it can be argue that a private industry will always create more growth because they can stay focused and leave politics out the business model (at least until the government starts handing out money to their competitors)."

Absolutely, if you consider the case of ideal competition in an innovative industry. Case in point: the IT sector. (A side note: I wonder why the anti-deflationists continue to purchase better computers at ever-lower prices and don't push for creation of computer OPECs to put an end to this deflationary spiral :).

"I must also add that socialism seems very cold. It seems to pragmatize everything and break it down into numbers and statistics."

Hmm, the beauty is in the eye of the beholder. I am afraid the basic view within socialist societies is that it's capitalism that seems very cold and always seems to pragmatize everything and break it down into profits and losses.

"Have you ever read the short story The Ones Who Walk Away From Omelas? I would recommend it highly. "

A modern version of Dmitry Karamazov's vision? But then, Dostoyevsky was not a big proponent of free markets either...

"lso, I think you need to quit confusing Mexico with a “free” society. They have one of the most oppressive government on the planet (like Venezuela) and it doesn’t matter what they call their form of government if they don’t practice the basic tenets of said government."

But I wasn't talking about their politics, only about economy. As far as the libertarian cause is concerned, they could trade in slaves as cheerfully as rum and sugar cane...

"But I would argue that under a libertarian government you would allow for completely free trade across all borders regardless of government or regime."

Suppose the Libertarian government discovers (or learns from lobbyists) that business can make more profits by forming cartels. What would prevent the Libertarians from allowing that activity? If a cartel is a voluntary contract between free individuals made to maximize their profits, and the Libertarian dream is precisely to let everyone maximize his profit the best he can, why would they break up Standard Oil, for instance?

"Free markets will lead to a free society."

Hmm, if you can convince me that there was any sizable opposition to slavery within the Confederacy, perhaps, I will agree with your point.

"I believe it’s coming for the Chinese."

I hope the Chinese keep their current system of government for a while. It's a good country and it will be a real pity if it goes down the drain.

It's a good discussion, but I'd like to point out that your original premise was this:

Give me one example. One single successful incident of a government, any government, injecting massive amounts of stolen money (I mean tax dollars) into anything (infrastructure or otherwise) and the overall outcome was economic GROWTH.

Then, looking at data showing 7%+ growth during the Great Depression due to government spending, you reply with:

I would like to point out that GDP is measured with government spending included! I also think that if Obama spends trillions of tax dollars the GDP will rise, but I don't think the "real economy" will grow.

So, economic GROWTH isn't good enough. It has to be what you define as "real economy" growth. Well, most of us live in the mixed economy where some things are from the government and some are from the private sector, and when it comes to paying the bills, a job is a job.

The entire purpose for governement spending during the Great Depression was due to collapse of the private sector. I know, it's all Keyneseism which has been discredited, but that's the way it worked. The government spent money, the economy grew. Yes, maybe the economy was growing with devalued dollars, but a guy who needs to pay the bills will rather get paid with devalued dollars than not have a job at all.

As to your claim that the economy didn't recover until after WWII, sure, times were tough through 1940. When FDR took office in 1933, the unemployment rate was 25%, and for those lucky enough to still have a job, wages had fallen by 42.5% from 1929 to 1933. By 1940, unemployment had fallen to 14.6%. Still bad, but 1933 to 1940 was the largest gain in employment in U.S. history.

Meanwhile, I have a question for David in Qatar:

Can you give us one example of a country and a time when your ideal economic principles have been enacted?

Therein lies the problem. Without a compete separation of State and Economics, the economic principles of Classical Liberal thinkers (those whose Enlightenment were the foundations of the separation of Church and State) can not be fully implemented. These are not my ideals, although I after much study consideration I have found to be undefeatable.

Your analysis of the Great Depression is based on a fallacy exposed in "Economics in One Lesson" by Henry Hazlitt, written in 1946. You can see the results of the government investment. But what you are not seeing is what was foregone by the removall of wealth from the private sector to the public sector. As Hazlitt wisely remarked as the foundation of his teachings, "The are of economics consists not in looking merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group, but for all groups."

By that economic principle, FDR's New Deal (and Hoover's pre-New Deal before him) failed. Although his investments did increase wealth in the sectors of society that they were placed, the effects of the overall wealth of the nation was a net loss. And as I have shown why that is, in great detail, in many posts above (the issues are calculability, bureaucracy, and efficiency) I will not repeat it in this post.

Furthermore, as I have covered in detail, FDR (and Hoover before - and Bush and Obama now) did not even know why the depression started in the first place. From the onset, all were doomed to fail, as does all government intervention in the long run despite what immediate benefits you may witness in one particular segment of society. (And very rarely is the ideal of the Statist - to benefit the least fortunate - ever the goal of such intervention or the result of such intervention).

Thank you for the answer. In short, you are saying that the economic principles you are advocating have never been implemented.

You clearly know economics and economic history. However, it is really easy to take an ideal, hold reality up against it, and point out all the flaws of reality. For example, I could use pictures of supermodels to show my wife what she should try to look like.

Likewise, you are looking at studies which suggest what might have happened if the New Deal had never occurred. You compare reality--the New Deal--to your ideal world which never existed. It's all well and fine for classroom and blogosphere debate, but it doesn't hold water, because the alternative scenario is fake.

So, somehow, because FDR didn't apply the principles of Classical Liberal Thinking, he destroyed the American economy.

Yet, here we are, flush toilets and everything.

And by the way, that thing with pictures of supermodels, I don't recommend it.

Every government attempt to create wealth is a net loss of the overall wealth of the nation. That is what is being disputed by others, and I am attempting to show why that is indisputable.

I am not saying that society has not continued to progress despite that overall loss of wealth caused by government. It has progressed precisely because the private sector has continued to create wealth on its own whenever it can. When that stops happening, however, which may be sooner than you think, our society will suffer accordingly.

The explanation for why government intervention in the business world is always a net loss for the overall wealth comes down to calculabilty, bureaucracy, and calculability. If you can find a flaw in any of those arguments, I'd be happy to discuss that.

Otherwise, what are we looking at here? The progress of society is being eroded away, and instead of welcoming a new of looking at the problems, you are dismissing them and saying, "well it could be worse."

When Ron Paul made eliminating the Federal Reserve System a centerpiece of his presidential primary campaign last year, media pundits and others scratched their heads in amazement. After all, they reasoned, is not the Fed a collection of "conservative, buttoned-down" public officials who are given the mission of providing prosperity?

Indeed, whenever Ben Bernanke and his predecessor, Alan Greenspan, have traveled to Capitol Hill to testify before congressional committees, they are treated as royalty, economic geniuses whose every word is treasured, even if Congress and the press cannot comprehend all of them. If there is any criticism for these men, it is that they have not inflated enough.

However, in watching one exchange last year between Rep. Paul and Bernanke, I was struck not only by the lack of comprehension of economic logic that Bernanke possessed, but also his utterly wrong view of the actions of the Herbert Hoover administration. In response to Rep. Paul's criticism of the numerous Fed-oriented bailouts, Bernanke quoted Andrew Mellon, Hoover's secretary of the treasury, who had advocated that the government permit weak businesses to go under in order to "purge the rottenness from our system."

Unfortunately, Bernanke got it wrong. After quoting Mellon, he assumed that Hoover had followed Mellon's advice, which clearly is not what happened. Instead, as Murray Rothbard conclusively pointed out in his classic America's Great Depression, Hoover ignored Mellon and continued his attempts to bail out failing businesses and implement huge public works projects in order to "increase employment."

The irony is that Hoover's policies did "liquidate" the farmers, the bankers, and many others, despite the efforts of the government to keep it from happening. Unfortunately, the liquidation was much worse than it would have been had Hoover done what his predecessors had done: not intervene into the economy during a downturn. (President Warren G. Harding, although ridiculed by historians for his relative laissez-faire viewpoints, nonetheless understood the limitations of federal power in economic affairs and refused to intervene when the economy faced a serious downturn in 1921.)

When the U.S. economy bottomed out in early 1933, the process was disastrous. By delaying the inevitable, Hoover's policies made things even worse than they would have been otherwise. If that were the end to this sorry tale, then at least there could have been a robust recovery; that did not happen because the government under Franklin D. Roosevelt blocked the economy from rebounding as it had done in 1922 and beyond.

The New Deal under FDR ensured that any recovery would be anemic, as the government (in the name of preventing unemployment) attempted to organize the entire U.S. economy into a series of cartels. Furthermore, the government made it difficult for financial markets to invest in new private enterprises, as the New Deal attempted to limit entrepreneurial entry into the economy. The result was a very limited recovery with unemployment averaging well over 10 percent until the end of 1941.

Had Bernanke understood the history of the Great Depression – he allegedly is a "scholar" of that era – perhaps he might have understood that the actions of his Federal Reserve System not only created the boom which led to perhaps trillions of dollars of malinvestments, but also is preventing the brief-but-necessary liquidation of malinvested assets. Not only did his reply to Rep. Paul demonstrate his ignorance of economic history, but his subsequent actions further point to his lack of basic economic knowledge.

First, and most important, by backing the wrong-headed actions by Congress and the U.S. Department of the Treasury, and by purchasing hundreds of billions of dollars of private securities, the Fed is propping up businesses and financial institutions that either should be permitted to fail or at least reorganize to become more economically viable. Second, the Fed and its government allies, by propping up weak entities with money that essentially has flown off the printing press, prevents resources from flowing to those areas of the economy that are financially stronger, thus weakening the entire economy.

The central problem in the U.S. economy is that the Fed, by pursuing a wrongheaded policy of artificially lowering interest rates and conducting a regime of easy credit, has encouraged malinvestments on a massive scale. After the malinvestments were exposed, the Fed then piled onto the damage by attempting to prevent their liquidation. (Bernanke and Treasury Secretary Henry Paulson, plus President George W. Bush, told members of Congress that there would be "riots in the streets" if Congress did not pass the original bail-out proposals.)

If that were not enough, Bernanke and the Fed have signed onto the upcoming "stimulus" programs being touted by President-Elect Barack Obama which are nothing less than wasteful pork-barrel projects that constitute a wish-list for vote-hungry politicians. Combined with the promised surge in financial and business regulations that the government is going to impose, this means businesses are going to be starved for resources, just as they were during the 1930s.

Bernanke and other Fed officials have done something else that may prove to be just as disastrous as the ill-advised actions they have so far taken: they have joined in the "blame the market" chorus and permitted the Fed to be seen as the guy on the white horse riding in to save Americans from those greedy and savage markets. This is analogous to the local firefighters being fêted as heroes when they throw gasoline onto the house fires that they have set themselves. Not only did they cause the original fire, but they also make things much worse after they supposedly "ride to the rescue."

Not only was the Fed the main culprit in creating the unsustainable boom, but it also has been the chief enabler of the disastrous policies that the government has implemented following the collapse of the boom. Because the Fed stands behind all of the "stimulus" transactions with its promise of "liquidity," policymakers can operate with the fiction that the Great Backstop in Washington will prevent future financial disasters.

If ever a government agency should be sent to the trash heap, it is the Federal Reserve System. For nearly a century, it has inflated the dollar, stood behind questionable and downright unsustainable financial activities, and launched one boom-and-bust cycle after another. Yet, even when such actions are exposed, nonetheless the central bank has plenty of enablers in Congress and in the media who somehow believe that the Fed can reform itself and should be given even more power and authority than before.

In fact, in the wake of every Fed-created disaster since its unfortunate inception in 1913, Congress has bestowed the central bank with even more regulatory and financial tools than it had before the previous economic crisis occurred. It is obvious that when it comes to fighting economic "fires," Congress and a sizable portion of the American pundit and political classes seem to believe that the best "firefighting" tools are buckets filled with gasoline. Thus, our "leaders" have ensured that the previous crisis will not be our last. Like Bill Murray's character in "Groundhog Day," we will be forced to re-live the same sequence of events over and over again.

William L. Anderson, Ph.D., teaches economics at Frostburg State University in Maryland, and is an adjunct scholar of the Ludwig von Mises Institute. He also is a consultant with American Economic Services.

That is possible the most absurd statement I have ever seen. You want to tell me that the Iraq war created more than it destroyed? I think thousands of soldiers and civilians might have to take issue with you on that one.

I agree with the assessment that the Fed is ultimately responsible for blowing the bubbles. Why they pushed so much easy credit into the world over the past 20 years is beyond me.

However, Professor Anderson is bemoaning the potential for new financial regulations. The current financial crisis suggests that there is a need for some third party referee in the financial markets.

Why? It wasn't merely the liquidity that was the problem. It was what the free market did with the liquidity. Mortgages were bundled into securities (MBS) and insured with credit default swaps (CDS). This combination allowed the banks to sell off as much debt as they could originate, and no longer be connected to the risk of default on that debt.

Because buyers felt that they were protected from default by the CDS, they bought as much as they could and took on huge leverage. (Much of this liquidity actually originated with ZIRP in Japan.) So, you go and borrow money in Japan at 1%, invest in an MBS which pays 5.7%, and buy a CDS which costs 1.2% and you end up with a "guaranteed" return of 3.5%. Because you think it is "guaranteed" you make the investment with 40 to 1 leverage, creating such a huge demand for MBS that the banks drop all lending standards in order to create enough "product."

Sure, if the whole world were on a gold standard, I don't think banks could create money and leverage out of thin air like this, but that isn't the world we live in. With the current system, you need regulations to prevent this kind of activity. (In fact, one of the reasons they named it a Credit Default Swap was that if they called it "debt insurance" the issuers would have needed to comply with insurance regulations which required an actual capital base to back up the product. Instead, AIG created a multi-trillion market backed up by...itself.)

on the mortgage disaster...from the senate hearings. the government deregulated the industry for each state to watch over the program. each and every state is at fault for allowing unfair and unsafe business practices. as we know, states cannot manage themselves nor have the manpower (intelligence). we should be thankful for china for buying our debt.

Be careful; you are treading into the broken window example here. Its been mentioned a few times, but I think it goes well to describe here briefly

The broken window:

A group of young children throw a baseball through the window of a small business. One could argue that the destruction of the window has created economic growth, for now the business owner must go out and purchase a new window from the glass maker.

However, in buying that new window, the business owner uses money that he could have spent elsewhere; say to buy a suit. So instead of buying a suit from a tailor, the businessman buys a window from the glassmaker. The glassmaker is happy because he gets business, but the tailor is sad because he losses business. No economic growth because of opportunity cost.

Now, applying this fallacy to the Iraq war. We are spending billions of dollars in Iraq "creating jobs, etc, etc" however those billions could have gone into a tax break for all business owners, who could then employ workers here at home and promote the economy. Or those billions could have gone any other direction; the point is that you cannot say their use in Iraq was any more a benefit than here at home.

By opportunity cost, the arguement that the Iraq war created economic growth is false.

I would argue that instead of building infrastructure with those billions in Iraq, using explosives and gasoline driving around our tanks, among other wartime expenses, has yielded much less utility for those that spent the billions than if those billions were used in the U.S.

but the glassmaker needs to upgrade for all of the new business. he hires locals for the additional work. i wish i had bought stock in those companies that are benefiting from the war--defense contractors, armor, engineering firms, cement, wood and pulp, oil, and so on. you tell me there is no growth from the war? the billions of dollars is going somewhere. (remember, this is satire) (you fail to see the humor in my comments)

Saunafool - "I agree with the assessment that the Fed is ultimately responsible for blowing the bubbles. Why they pushed so much easy credit into the world over the past 20 years is beyond me."

Because Proverbs 22:7 states that "The rich rule over the poor, and the borrower is the slave of the lender" and James 2:6 "... Are the rich not the ones who oppress you, and the ones who drag you into court?"

Easy credit lures the sucker the barren, the desperate, the socially challenged, the poor self image into saying "if only I had a little more"

"Buy today, pay it back, nobody will ever know," but when that doesn't work they put our very nation in debt so they can strip us all of our freedom.

Read your money. "This note is legal tender for all DEBTs public and private." Note it doesn't say this note has value only that you can use it to pay your debt. Therefor our fiat money is only good to those who are in debt.

Real financial genious is when you figure out how to use that instrument of debt to buy assets that have real value to someone, so when its time to cash in you have something rather than nothing.

I beg to differ. Matt 6:24 says "No one can serve two masters. Either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve both God and Money." If am in debt then I serve money. I cannot wholey choose any other option.

This is written with a nod to Murray N. Rothbard, whose essays have given me an unshakable optimism about the future. If someone were to ask me, "what would be the first thing you would do upon being elected President of the United States?", my answer is "I would outlaw government." The next question would probably revolve around one of three things: either an admonishment that certain people might fall through the cracks without government assistance, that humans would not work cooperatively in such a scenario, or that people need some sort of protection from those that prey on each other. There are an assortment of arguments that you will find for the existence of government, each of which can be refuted with simplicity. Here, I want to focus on the argument that people wouldn't work together cooperatively without a governing body.

As a voluntaryist, it's important to remember that government is coercion. In order for government to provide anything of value, it must take from somebody else. Since nearly all of government's assets are acquired by decree rather than through voluntary contract, there is practically nothing that can be provided without coercion. The statist's view is truly the cynical one. In fact, the statist can not envision a world built on voluntary contract. It would be quite difficult indeed, to return to a place where accomplishments only happened in an environment of voluntaryism (true classical anarchy.) Yet, it is the only view which the optimistic libertarian can have. If the libertarian does not believe that people can work together without being forced, then there is no hope at all. Actually, there would be no point in holding a libertarian belief system. In other words, there is no place in this world for the pragmatic libertarian. He/she should be cast off to the dust bin with the rest of the statists.

The only reformer I wish to associate with is the one who sees the need for permanent intellectual revolution. The "way things are" is a result of the cynicism of the statist, and the quiet acquiescence of the individuals they coerce. A positive outlook requires us to take a different view, a long term approach to solving current problems. We can't deny that statism has won the majority of history's intellectual battles. The results of this phyric victory has been endless war, fraud, deceit, and accomplishment-by-force. The beauty of the libertarian is that we focus on the "way things ought to be" with little concern for those who have a keen interest in keeping things as they presently are.

A world built on voluntary contract has to be possible. How do I know this? Whether we recognize it or not, voluntary action is the cornerstone of our existence. We engage in it dozens, maybe hundreds of times each day. Societies always attempt voluntary action as the first step rather than the last. Unfortunately working together is difficult. Coercion, on the other hand, is quite simple. Fraud, deceit, and violence are the tools of the individual with the narrow world view. Whether it's the businessman, out of ideas and scared of competitive forces; or the laborer convinced that he's worth more than his wage or that his job security is in peril, the easy answer is always coercion. But for society to progress, these easy answers need to be shown for the long term disaster they cause for all society. The worker who demands a pay-raise-by-decree is engaging in coercion, as is the lobbying corporatist and the farmer that demands a subsidy.

Voluntary contracts are between two voluntary parties and can not be revoked by the whims of the government or it's acquiescent mob. Statists would like you to remember your rights, only as a reminder of the limits of what you can do voluntarily. The libertarian needs to reject the entire concept of rights as nonsense. Rights decreed by government are merely privileges, even if that government rules with the magical consent of the majority. It is important to note that each time rights are bestowed upon a particular group, that group then becomes a special interest. Dividing society into special interest groups, each of which has to lobby for more rights, is a neat little trick. If the statist can pit segments of the population against each other there is no limit to what manipulation it can engage in to acquire more power. The final outcome of this type of rule will be a society that cannibalizes itself in the name of "good government."

I suspect that many would view me as a cynic, but I believe it is the true cynics that have brought you the world as it is now. I wish to introduce you to the world as it ought to be, and in turn, reveal true optimism. Rather than focusing on social freedoms and pragmatism, I focus on economic freedom and permanent intellectual revolution with the understanding that these are the keys to turning our absurd world upon its collective statist head.

one thing we can never overcome is speculation and angst either by the media or by traders, which control the prices and economies of everything. how do we avoid them (assassinate) and get back to traditional economics?

You not saying that there are no "rights" are you? Are there not basic human rights that belong to all people? Because if we all share and have certain equal rights then no one can lobby for special rights. Could you expand on this for me?

I am saying that any right granted by government, for instance the right to health care, education, etc. is only a temporary priviledge. It is not a right at all. Rights, in the traditional view, can not be granted by the government. Our Constitution was written to restrain the power of goverment, leaving anything undefined as Rights to people and the state governments. This was the greatest victory for individual power in recorded history. Of course, it didn't take long for Statists to reassert their authority and turn the argument upside down.

Which areas would those be thong? Revised for common language so that our ignorant people would see the fraud of our current lawmakers? Yes, but who would do it.

I agree that the constitution was designed to restrain the federal government. Any revisions could only give the government more power. Your argument for a revision is the base of both the socialist, the neo-cons, facisits et.

how many times has the bible been revised? many. things change over time to reflect current conditions. the constitution is correct on principle but needs updating to reflect changes. i don't think our forefathers envisioned capitalism at its worst or the greed of a big government. capitalism screws up a lot of things. one can make that argument for all forms of economies of scale. the big question is how can we erradicate the evils of capitalism without anarchy?

Lol. What great Bible revision are you talking about? Is that something they taught you in socialist school? Updates to common language are one thing, but when you begin interpreting on original intent rather than on standard textual criticism then you are on thin ice. Schisims within the Church form when men determine for themselves that minor principles are major. I know that I am the one that brought scripture into this discussion, but I think it is rather common sense knowledge that the one who is owed has power over one who owes.

Our forefathers came here to explore liberty, to live in freedom to act and choose as rational men. Your argument is that government has to exist to exclude those men who cannot act rationally. You notice that our constitution has no law that says men cannot kill each other, but it establishes a premise that mankind has the right to live and empowers states to make laws that discourage men from killing one another. How that happens is up for debate, and one group of like minded people should not try to impose thier view on another but there is an underlying assumption that you don't seem to share that men within this social contract are rational and would not normally kill each other.

When Jefferson drafted the Declaration of the Rights of Man and Citizen (copying much of our own Declaration of Independance) he refined "Pursuit of Happiness" as "Pursuit of Property". So were they fundamentally capitalist, considering most of the signers were farmers or businessmen, I would argue that they were.

I think our forefathers knew what you call "Capitalisim at its worst and the greed of big government" Was not the political machinations of England a bigger government than our own, and if you call what we have right now capitalisim then I mock you. Our government is quickly transforming into what I would call Neo-Mercantilism or other forms of Corporate Oligarchy. "Too big to fail" means just that. This downward slide began with the Central Bank Hamilton so desperatly wanted to enslave the people and continues this day with the Federal Reserve.

No, I don't propose revising the constitution, I would propose removing all those from office who refuse to live by it. Other than maintaining roads, defending our shipping lanes, and providing a stable currency I don't think our federal government has any business in the economy. I think it is arguable that they are not doing very much of the above as our roads fall into disaray, pirates sac our vessles, and our currency is about as stable as a wet spaghetti.

We have a process for ammending the Constitution. Rightly it is difficult, much more so than passing a law. Society at large has decided to place ammendments that say all citizens have the right to vote regardless of thier status skin color, or gender.

I do not think that the federal government should have a direct impact on healthcare, on the economy, on marriage, on which industries thrive and which fail, on the well being of the elderly or any other social issue. I think that smaller local like minded people groups should determine which if any of these laws they want to enact in thier communities. People then can move to a community that thinks like them or move away from one that does not.

I suspect that many would view me as a cynic, but I believe it is the true cynics that have brought you the world as it is now. I wish to introduce you to the world as it ought to be, and in turn, reveal true optimism. Rather than focusing on social freedoms and pragmatism, I focus on economic freedom and permanent intellectual revolution with the understanding that these are the keys to turning our absurd world upon its collective statist head.

David, I don't view you as a cynic. You are clearly an idealist... permanent intellectual revolution...and you are clearly very intelligent and well-read.

I do not think that the federal government should have a direct impact on healthcare, on the economy, on marriage, on which industries thrive and which fail, on the well being of the elderly or any other social issue. I thinsmaller local like minded people groups should determine which if any of these laws they want to enact in thier communities.k that People then can move to a community that thinks like them or move away from one that does not.

Gemini, the core question which has been thoroughly debated since the beginning of the country is whether or not the United States is a United Federation or a Confederacy of States. It would be nice if there was a clear-cut answer, but there are positives and negatives to both the Federalist and Conferderate approaches.

One of the core questions along these lines was the Civil Rights Movement. It was clearly a case of the Federal Government getting involved in a social issue. Why? Because the smaller local like minded people determined that they didn't want any of the anti-discrimination laws enacted in thier communities.

So, do you want to live in a country where blacks are not allowed to go to college in Alabama?

If the Federal Government had not intervened, I am not sure things would be different, even today. During the 2008 election, more than 80% of whites in Alabama, Mississippi, and Louisiana voted for John McCain. If those states were still denying blacks the right to vote, how would the "free market" change anything?

So, while some problems are better solved on a local level, on another level we are One Country. We rise and fall together, and economically and socially we are so interconnected such that a Federal approach to many issues is inevitable. (I know, in the libertarian world view, it isn't inevitable, but in my world view it is. I'm a Statist.)

You could argue that the federal government had a right to step in and base its decision regarding Civil rights on protections of all men under the constitution. Why do we need an ammendment to state what is plainly clear that "all men are created equal..." The amendment merely explained that those words are inclusive of blacks, women, and non-property owners over the age of 18.

Your argument is that outside pressures wouldn't have changed the south anyway is a widely held view taught in schools to qualify civil rights legislation such as affirmative action in the same category as equal opportunity in employment. The Peculiar Institution argued that industrialization of the farm industry was stunted in the south due to slavery, but we know that even the midwest didn't fully industrialize until rail had permiated westward near the turn of the 20th century and heavy farm equipment was cheeper to move.

To this day the south is second only to southern california in the amount of manual labor required for farming. Fruits such as mellons which are picked by hand (and tobacco) are very common in the south. Do you think honestly that machinery hasn't replaced these jobs because "whitey wants to keep blackie down"? Or is it rather that the predominantly blacks who work these fields don't see any opportunity and relegate themselves to field labor? An astute liberal would argue that it is an economic condition that causes the self discrimination, but re-distribution of wealth without a required increase in production damages society as a whole. (The premise of Dare's post).

You mentioned the white voter statistic but you would be wise to realize that these people woudln't have voted for hillary, joe biden or any other abortion lover either. These are the people who are supporting state wide marriage amendments, pro-life legislation, et et). Some of these groups go so far as to link civil rights laws to abortion claiming the rights of the unborn.

My voting record in my own local elections on environmental issues and family issues would indicate that I agree that while I hold a Confederate ideal I understand that is not a reality at this moment, and most likely not in my lifetime.

I cannot argue is that a movement to federal government is a natural progression, a seemingly easy road where we let other people decide our fate until we see no path to self governance. The Deuteronomic Cycle is alive and well as we support our own tyrany.

Thong, your quips and one liners really add nothing to this discussion. I don't have issues with my own skin color. I have issues with white people in general trying to fix black people's problems. I assure you that I'm not the one with the issues.

You after all were the one who suggested revising the constitution. Please consider your audience in the future before allowing such useless drivel to come out of your mouth. Some of us may have assumed you were serious. This will be my last post, as I am no longer following this blog.

Don't quit. apparently my quips and one liners are upsetting you because i'm striking a cord that normally isn't pricked. since you are no longer viewing this blog and probably attending a rally of some sort, i hope you get a job some day and pay taxes. in addition, i hope you grow up and become more secure in your skin. god would love you more. your lack of humor and intelligence is to die for. remember satire?